Nope you're going to pay tax on the withdrawal, plus loan origination fees, plus interest. So you'll withdraw $60-65K to get the $50K, and you still have to pay back $60-65K with interest. This is 50 kinds of dumb, imo.

If you must borrow money, bank loan or HELOC is the way to go. Worst case scenario, if you for some reason default on the loan, you ruin your credit, and if you have no way to pay it back, you can usually settle and possibly file bankruptcy.

But if you default on a 401K loan, you have IRS problems to deal with on top of the debt you assumed by borrowing your own money. AND THEN YOU WILL BE IN A WORLD OF shite.

DON'T DO A 401K LOAN.

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Posted by tigerrocket

Member since Aug 2008

162 posts

Posted on 6/5/13 at 4:11 pm to Vols&Shaft83

wrong

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Posted by Golfer

Member since Nov 2005

75052 posts

Posted on 6/5/13 at 5:57 pm to Vols&Shaft83

quote:
Nope you're going to pay tax on the withdrawal, plus loan origination fees, plus interest. So you'll withdraw $60-65K to get the $50K, and you still have to pay back $60-65K with interest. This is 50 kinds of dumb, imo.

If you must borrow money, bank loan or HELOC is the way to go. Worst case scenario, if you for some reason default on the loan, you ruin your credit, and if you have no way to pay it back, you can usually settle and possibly file bankruptcy.

But if you default on a 401K loan, you have IRS problems to deal with on top of the debt you assumed by borrowing your own money. AND THEN YOU WILL BE IN A WORLD OF shite.

DON'T DO A 401K LOAN.

You're wrong.

I borrowed against mine a few years ago:

- The loan amount wasn't removed from my account so I continued to earn dividens on it.
- I paid a $25 origination fee and a 3.75% APR
- A default doesn't show up on your credit. You are just issued a 1099 by your loan administrator for early disbursement.

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