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To: All Mtn Ski who wrote (5322)	5/3/2005 4:56:33 PM
From: The Ox	Read Replies (1) \| Respond to of 5867

Hi AMS, The availability of 401K loans are often a great situation for the lower income, younger individual. They choose to pay themselves the interest money instead of giving it away to some bank or loan agency. Many young people, who never have had much in the way of savings, are starting to save aggressively in a 401k plan knowing that they can tap 1/2 of it when the need arises. In some cases, for the first time in their lives they don't have to go into debt to accomplish buying a car or having a down payment on a home. While they are sacrificing some of their retirement funds for a short period of time, they are also avoiding paying out high interest, which can substantially reduce their net cash flow. Often in the past, the only other option was to get a loan from work or some high interest rate shark but now they can avoid this by using their 401K. I think too much negative emphasis is put on people tapping into their 401Ks for loans. For example, if someone were to borrow $16000 to buy a new car and pay themselves back in 5 years instead of the auto dealer, they actually save about $18 per week for the first year and about $2500 over the course of the 5 years. Sure it would have been nice to leave that money in a 401K if you had the resources but keeping $500 per year in cash flow is a big deal, imo! Not everyone will be smart about when to take money out but it does provide a lot of people (who never had an option in the past) with both the incentive to save for the future and a potential cushion for the short term. All the while it defers the tax liability on the contributions. Lots of pluses with very few negatives. jmo mh