Buying a home is part of the American dream. Many people look forward to it for years, and when they find an opportunity, they go for it in any way they can. Since cash is harder to come by these days, borrowing money from a 401(k) to buy a new home can suddenly look very appealing.
Many employers offer a 401(k) retirement plan for their employees. Its purpose is to save money for retirement. Employees can contribute to a traditional 401(k) with tax-free money, but will pay taxes on their withdrawals. If an employer offers it, they could contribute to a Roth 401(k) with after-tax money, which enables all withdrawals during retirement to be tax-free.
