John P. Napolitano’s Making Cents column.

It seems innocent enough. Something has come up that requires a fair amount of cash -- now. As your mind discards various options, you hit on what at first blush appears to be a bright idea: borrowing from your 401(k) retirement fund.

Before running to your human resources director with your hand out, take a few steps back and consider the pros and cons of dipping into your 401(k) before retirement.

There's definitely an upside. First off, there's no credit check, no loan application and it's a sure bet you'll get the money. The interest rate when borrowing from a 401(k) is typically on the low side, often a couple percentage points above prime rate.

Granted, the above are attractive elements, but let's take a look at the downside of borrowing from a 401(k) unless it's absolutely necessary.

If you decide to leave your place of employment -- or if that decision is made for you -- the repayment note will be due within 60 days. If you can't repay the loan within 60 days of leaving the job, this ''loan'' is in fact a premature distribution, which translates into your owing both federal and state taxes -- in addition to a 10 percent early withdrawal penalty if you're under that magic age of 591⁄2. And let's just add this topper -- borrowing from a 401(k) is considered a consumer loan, and therefore any interest you pay is not tax-deductible.

Another aspect that must be taken into consideration is the psychological effect this ''one time only'' self-loan may have on the way you view your retirement fund. To borrow from a well-known potato chip advertisement, sometimes you ''can't eat just one.'' Those words of wisdom not only apply to salty snacks, but to other bad habits, including the use of retirement funds as a personal bank account.

Do not borrow from your 401(k) for anything speculative or for someone else's use. It may seem like a good idea for you to use that money to help someone buy their first home or a new vehicle, but if you can't repay the 401(k) loan unless they repay you first, forget about it. The risks and costs associated with your missing 401(k) loan repayments are far too severe.

Granted, if you're faced with a legitimate emergency and have no other access to fast cash, borrowing from your 401(k) retirement fund may be the most viable solution. But if time is even somewhat on your side, it's wise to check out other financial avenues, such as a home equity loan, a line of credit or even a personal loan.

401(k) plans are for retirement, not lifestyle. The contents of your 401(k) may be protected from creditors, so don't let bill collectors persuade you into using your 401(k) plan to pay the bills.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree. Do you have a financial issue you want him to answer? E-mail him at biznews@ledger.com or call him at 617-786-7073.

The Patriot Ledger