How to Set Up a 401 Plan to Borrow Money

1). Set up a retirement account through your employer. Most employers have retirement savings accounts that can be established through their human resources departments. Your contributions can be deducted from your payroll check. You can have payments deducted before or after taxes are taken out of your check.
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Contributing a portion of your salary to a tax-advantaged account is a smart way to save for retirement.stack of cash image by jimcox40 from Fotolia.com

Contribute up to the maximum amount for which you are eligibile. Most companies match what you contribute to this account up to a certain percentage or a dollar amount. MSN Money suggests that you contribute 10 to 15 percent of your gross pay.
3). Choose your investment selections. The longer your time until retirement, the more aggressive you should be. If in your twenties, you should be invested more in the stock market than in fixed-income investments such as bonds or certificates of deposit. As stated on MSN Money ,"Consider putting 80% or more of your retirement funds into stocks or stock mutual funds to take full advantage of their potential for growth."
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Borrowing from your retirement accountready for retirement image by Pix by Marti from Fotolia.com

Borrowing from your 401k can be done through the website of the financial firm that administers your company's plan. You can also request a loan through human resources. Before you can borrow from your retirement account with your employer, you will have to be vested. Check with the human resources department on the length of time you have to keep this account before you are vested. When you are vested you have the ability to borrow up to half of the total amount of your retirement account. This includes the money you contribute and what your employer matched.
5). Repayment of the loan will be deducted from your check every pay period until the loan is paid back in full. You can decide on the amount of time you need to pay the loan back. There may be a limit on the amount of time the employer gives you. If you are terminated or decide to leave your job for any reason, you will be required to pay the loan back in full in a certain amount of days.