I took out a 401k loan of 20,000 by June, 2008. The loan is payable within 5 years. However, I will be laid off by my current employee by the end of this
month- November. The paperwork shows that I have to pay back the remaining loan within 90 days from the laid-off date. My question is do I have to pay back all
the loan by the end of this year(income tax?) or by the end of the 90 days period( ie next Feburary, 2009)..Also do I have to add the 401k loan on top of my
income this year? Thanks in advance..
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Please help me on my 401k question
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 kev2008 |
Please help me on my 401k question |
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Posts: 1 (11/01/08 11:10:48) |
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jdnay |
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Posts: 365 (11/04/08 13:58:01) |
You have two option generally:
1) Pay off the loan within the 90 day period. If you do this, there are no income tax issues. The loan is just paid off and the money is in your 401(k). 2) Don't pay off the loan. In this case the unpaid balance is going to be counted as income and you will owe income tax and a 10% early withdrawal penalty if your are not at least age 59 1/2. |
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Monica44 |
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Posts: 5 (02/10/09 11:21:11) |
You will need to pay off the loan within the 90 period to avoid any fees or it is like you took out the 401K early and you will have to pay the penalties and
taxes on it.
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