Some workers who have been affected by the mortgage and credit crises have been borrowing from their 401(k) accounts in order to keep up with current expenses and pay off credit card debt. When you sign up for a 401(k) plan it comes with an allowance that tells you it's an option to take a loan from your account.

You might be thinking that this isn't a big deal, and the money is yours so borrowing it from yourself shouldn't be something worth talking about. As with most things 401(k) related, there are tax considerations, penalties, and overall savings that need to be taken into account. Before you take a loan from your 401(k) be sure to consider the negative impact it can have on your nest egg when you .

If you find yourself in dire straights (like if your home is facing foreclosure) with nowhere to turn but your 401(k) savings, you're allowed to tap your account up to $50,000 or 50 percent of the invested amount, whichever is less. If your loan is in good standing, meaning you pay it back, you'll avoid the tax consequences that would come into play if you were to default on your loan.

The reason there are tax penalties is that a defaulted loan is treated as a withdrawal and is subject to income tax and an additional 10 percent penalty for taking an early distribution. There are other points to consider besides taxes: some plans don't allow you to make contributions while paying off a 401(k) loan and others make you wait a certain amount of time before continuing contributions. And if your employer matches contributions, you're not only missing out on your own contributions but theirs as well.

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