So my question is: how soon after setting up my 401k can I take out a loan? Is there a minimum amount of time one must wait generally? Or a certain dollar amount?
What and if you can borrow from it is determined by the plan itself.
How much you can borrow depends mostly upon how much is in it.
Most plans allow participants to borrow up to 50% of the value of the plan.
However, if you have only had it month, there probably isn't very much in it.
Different 401K plans have different rules for taking out a loan. You'll need to read your plan rules or ask the plan administrator. Contributions to the plan are suspended while there is an outstanding loan. If you're planning on using a 401K as a savings account you shouldn't be opening one to begin with.
The danger with a 401k loan is that if you leave the job or get laid off (even through no fault of your own), you have 60 days to repay the entire loan.
If you don't repay it in time (and who can, you just lost your job), then the loan changes to a distribution an you now owe income taxes and a 10% penalty on the amount you defaulted.
Default on a 401k loan, and the IRS is your debt collector.
A 401k is not a savings account & you can't just borrow from them anytime you want. If you do borrow you will end up paying a hefty tax penalty. Normally the only reason to borrow is to buy a home.
Being allowed to take a loan isn't automatic. You generally have to be approved as hardship situation. And you can only take a loan for the amount you have in your account or less.
It's not a savings account. If you know you're going to need to buy a car, then start saving for it now OUTSIDE of the 401(k).
