Borrowing from your 401(k) comes with lots of negatives. I know, it seems like an attractive place to dip into in the event of an emergency. The reality is that you are sacrificing your future to cover shortfalls today. Borrowing from your 401(k) removes funds that would otherwise be invested in the markets. In addition, should you quit or get fired from your current job, the amount of the loan must be repaid, otherwise it is considered a distribution from the plan. That amount is then subject to taxes at your top marginal rate, as well as a 10% penalty if you are under 59.5 years old.