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It's happened to the best of us. One minute everything is fine, the next you're staring into the face of a rather large and unexpected bill and you have no idea how you are going to pay for it. Unforeseen events can wreak havoc on our financial well-being and force us to do things we might not otherwise do with our money. If this is you, you might have options. If you've been contributing to your employer’s retirement plan, you may have the option of taking a 401k loan.

Note that while most plans do allow loans, they are not required to offer them. Talk with your benefits office or 401k provider to be sure.

Also, keep in mind that just because you do have a loan available to you, that does not necessarily make it the best option if you happen to need money. Many times, it's the completely wrong thing to do. Loans are considered a benefit in a 401k plan, but they are intended to be used in “last resort” situations.

If you do have a strong financial need for it, you should probably consider it. Unfortunately, we've seen retirement funds depleted in the form of loans for things like vacations and home remodels; not exactly the reasons they were intended for.

Be wise. If you're considering a loan, try to limit its use to help you through times of financial hardship. These might include prevention of eviction or foreclosure on your place of residence, medical expenses that are outside the realm of your ability to pay, or repairing damage to your home caused by natural disasters. These are just ideas. Of course, every situation is different, and some things are more urgent to some people than others. Use your own judgment regarding the severity of your particular situation.

On the other hand, if you're trying to fund your trip to Hawaii, or if you've been eyeing that high-definition T.V., a loan from your 401k should be the furthest thing from your mind. If you can't afford it from the money in your savings account or other non-retirement account, you shouldn't be buying it anyway.

Read our article on why a 401k loan can be a detriment to your retirement.

Do you have questions about 401k loans? We probably have the answer! Use the navigation tabs at the top to guide yourself through all the loan topics.