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re: Borrowing from your 401K
Posted on 7/10/13 at 10:22 am to LessofLes
Posted on 7/10/13 at 10:22 am to LessofLes
Yes, if you don't pay a 401k loan back, it gets treated as a 401k distribution which becomes fully taxable as ordinary income (+10% penalty if you are under 59.5 years old).
At that point, you no longer "owe" the money back. Loan is done.
Of course, on the other hand, if you pay the loan back as scheduled, it's like nothing ever happenned tax-wise.
At that point, you no longer "owe" the money back. Loan is done.
Of course, on the other hand, if you pay the loan back as scheduled, it's like nothing ever happenned tax-wise.
Posted on 7/10/13 at 10:53 am to JPLSU1981
quote:
Of course, on the other hand, if you pay the loan back as scheduled, it's like nothing ever happenned tax-wise.
Not exactly. You paid back your loan with after-tax dollars. That's a huge penalty.
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