Short-term liquidity needs are part and parcel of our daily lives. You may continuously find yourself in lack of funds before you retire for good. While the options for such loans are limited, there are plenty of retirement plans that give a provision of loan withdrawal. Most of us opt for conventional options like borrowing money from a lender, using a credit card for short-term needs among others. However, when you borrow money from your pension, you would essentially be borrowing money from your investments.

If you are also in need of short-term liquid cash, then here are specific steps you would need to follow while applying for a 401(k) loan:

1. Hardship loans
Before applying for a 401(k) loan, you will have to make sure that the plan you have invested in has the provision of hardship loans or not. You can approach the human resources department for clearing this query.

2. Paperwork
While the paperwork involved with a 401(k) loan is quite minimal, you would still need to fill specific forms and submit documents required for your case. We would recommend speaking to a benefits representative who can help you in reviewing all the paperwork before you submit it.

3. Eligibility
You would then need to verify whether you are eligible for a loan as per the provisions of the 401(k) plan in which you have invested. After completing the formalities mentioned above, you will be approached by a retirement plan administrator who would help you out in undertaking all the necessary paperwork.

4. Special documentation
Depending on your case, specific documentation may be requested. In this step, you would need to attach the same. Remember to get a photocopy of all the documents that you are sending. Keep this as a copy for yourself in case any further rectification is required. Send the documents or fax your paperwork to the location which is communicated to you while applying for a 401(k) loan.

5. Sign loan documents
After the initial documents are submitted, you would receive your 401(k) loan papers.
You would need to sign these papers and get your agreement notarized for following further procedure.

6. Loan disbursement and repayment
After all of the steps mentioned above are followed, all you need to do is wait for your loan to be dispersed. Keep a tab on the amount received and draw out a repayment schedule based on the money you borrow while applying for a 401(k) loan.

The aforementioned guide will help you fulfil your short-term needs with the help of some cash borrowed from your pension plan. Remember to follow all the steps carefully while applying for a 401(k) loan. This will help in making the process swift and ensuring that there is no delay in you receiving the required money.