Re: 401K Loans

"Carole" <thenewcarole@xxxxxxxxx> wrote in message
news:7709jhF1f3ui9U1@xxxxxxxxxxxxxxxxxxxxx
Adelle wrote:
"Donna G." <DKGBeeker@xxxxxxxxx> wrote in message
news:5597-4A0A1ECD-4215@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Does anyone know if they charge taxes if you take a loan out on your
401K?

Not sure what the law is now.

When My husband and I did it over a decade ago (maybe almost two), there
was no tax to be paid if it was paid back within a certain time period
(can't recall what it was). But if it wasn't paid back in that time you
needed to pay the taxes for your tax bracket plus a 10% penalty.

Adelle Stavis

I watch Suze Orman all the time, and that sounds right, Adelle. I know she
is telling people not to take money out of their 401K's unless they really
have to.


Now is a terrible time to do that because you bought high and will cash out
low.

But there are new allowances to take out for education and one other reason.
I think the 10% penalty is waived. So, if you take out for these two reasons
(education and ?) you have to pay the income tax on it but not the
additional 10% penalty.

We did it to manage cash flow when we were buying the house. It was a scary
year financially but we paid it back within the year.

Adelle


.

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