Definition: The word "mortgage your 401k" is a slang term that refers to someone borrowing money from his or her employer's 401(k) plan. The term is commonly used in the context of saving for retirement, particularly when trying to save enough money for a certain period. The term "mortgage" typically refers to a financial institution providing loans to individuals who are looking to buy or renovate their homes or other personal property with the intention of selling it at a future time. The loan is usually made on the basis that the borrower will pay back the loan in an agreed upon amount over a fixed period. The term "401(k)" refers to a type of retirement plan commonly used by employees and employers alike, which allows them to save for retirement by contributing a portion of their salary into a separate account. The employer contributes a percentage of each employee's payroll deduction into the 401(k), while the individual contributions are made through either direct deposit or automatic transfers from another type of account. The term "mortgage your 401k" can be used to describe someone borrowing money from their employer's retirement plan for purposes other than saving for retirement, such as making a down payment on a home loan. The borrower may also use the funds to pay off debt or make other personal expenses.
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