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re: Paging Poodlebrain or qualified advice (401k loan repayment)
Posted on 3/7/15 at 9:15 am to LSUFanHouston
Posted on 3/7/15 at 9:15 am to LSUFanHouston
quote:Correct, and the interest is not deductible since you are paying it to yourself. Since you repay the loan with after-tax dollars, you pay tax on the interest you pay in the year of repayment. You pay income tax on that interest again when it is distributed to you, hopefully, after you turn 59-1/2. So the true interest rate on a loan from your 401(k) is actually higher than the stated rate.
The loan proceeds are not taxed. The repayments are made with after-tax dollars.
1
Posted on 3/8/15 at 4:33 pm to Poodlebrain
That makes sense. Thanks
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