THESE DAYS, more than 90% of workers with 401(k)s can borrow from their plans. If you've been diligently socking away a portion of your salary over the past few years (and you've had a match to boot), changes are that puts a lot of cash at your fingertips. It certainly doesn't make sense to use this money for luxuries like a backyard swimming pool or a new car. But does it make sense to tap your 401(k) to pay off a loan? Typical plans allow you to borrow up to half your vested balance, but not more than $50,000. (Some plans might restrict borrowing to specific reasons like a home purchase, education or medical expenses.) You must pay the money back, with interest, over five years. But, because you are paying the interest to yourself, it isn't an additional cost. Just think of it as forced savings. If you don't repay the loan, you will owe income tax and a 10% early withdrawal penalty. There are three negatives to borrowing from a 401(k). First, you are giving up the tax-free compounding of the money you withdraw. Second, you are replacing pretax money with after-tax money. So, say you are in the 27% tax bracket (in 2002). It will take $1.40 in salary to replace the $1 you withdrew from your 401(k). Finally, if you leave your current employer, you will probably have to pay the loan back immediately. Not very attractive, is it? Our 401(k) loan calculator takes those variables into account in helping you decide whether to borrow from your 401(k). But before you even consider tapping your 401(k), make sure you have no other nonretirement sources available to repay the loan.