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1453 New Haven Road (Rt. 63), Naugatuck, CT 06770        Phone: (203) 729-9050       info@egfllc.comText Box: "Hidden Risks" These Missteps Can Play Havoc with Your Retirement “If only I knew now.” It’s a frequent lament, and definitely one you want to avoid in retirement. Being aware of some common, but often-ignored investment risk, may help. Although issues that relate to your retirement may not seem important right now, what you do today –or fail to do- may have a major impact on your financial security in retirement. Keep them on your radar screen -and off your list of regrets. “I’ll Pay Myself Back… With Interest” After contributing to a retirement account for several years –and benefiting from some strong market gains- your account balance may have grown substantially.  Unfortunately, the temptation to dip into your retirement balance might have grown along with it. If you’re mulling over such a possibility, the best advice is short and simple: don’t do it. The most obviously disadvantage of borrowing- though certainly not the only one-is losing tax-differed growth on the money you’ve withdrawn. What’s more, if your loan occurs during a market surge, the opportunity cost could be particularly steep. Another factor to keep in mind- those borrowed dollars will be taxed twice: first, because you’re repaying the loan with after-tax dollars and later on, when all the finds from this tax differed account are withdrawn at retirement. A loan might shortchange you in other ways, too. Paying back the principal you borrowed and associated interest may prove to be burdensome forcing you to reduce the amount you normally would contribute. What’s more, if any part of this reduction would have been matched by your company, you lose out again. Some employers even suspend matching contributions until a loan is fully repaid. Not deterred yet? In most cases, the money has to be repaid within 5 years. However, if you lose or quit your job, you may be required to repay the borrowed funds in full within 30-90 days. If you can’t manage that, your loan balance becomes a distribution that is fully taxable and subject to a 10% early withdrawal penalty. The bottom line? If you’re considering borrowing from your retirement plan, think long and hard about the trade-offs. Money needed to finance a new house, pay for home improvements or fund a college education- always among the top reasons for borrowing-can often be obtained in other ways that will not negatively impact your retirement savings. Home equity and other types of loans (low cost federal college loans, for example) and Roth IRA contributions (on which you already paid taxes) may be better options.   Reprinted in part with permission from Oppenheimer funds Distributor Inc, March 2007.