401K and Loans

L1: 401K and LoansDoes anyone know what the rules are on borrowing from your 401K?2006-07-19 08:28, By: Bill, IP: [72.195.179.63]
L2: 401K and LoansHello Bill:
To describe all the rules on 401(k) loans would be quite lengthy; however, there are some basics: (a) the 401(k) plan itself must permit loans; (b) all of this including the details of amounts, rates, terms, etc. will be found in your Summary Plan Description; (c) generally, one may borriw up to 1/2 the account balance up to $50k; (d) you may read the IRC rules @ IRC 72(p).
The Badger
wjstecker@wispertel.net
2006-07-19 09:22, By: TheBadger, IP: [66.109.211.254]

L2: 401K and LoansBill,
One more thing that I recall from the 401k plan I had at work was that if an employee left with an outstanding 401k loan, and did not pay it back in a very short window (30 days of termination?) then a 1099 would be issued that year for an early distribution from a qualfied plan, which I think would also cause the 10% IRS penalty on top of the additional income tax owed for that “withdrawal” amount. At least in our company, it was not a good idea to make a sizeable 401k loan if there was any possibility that you might be terminated, or might leave on your own for another job, or to retire, if you wouldnot be able to put thatborrowed money back into your 401k. This may vary from plan to plan, but I wanted to point it out as a possible pitfall. KEN2006-07-19 13:39, By: Ken, IP: [141.149.185.136]

L2: 401K and Loans
Where I worked, an employee could borrow up to 50% of the balance of the 401(k), up to a maximum of $50K.
If an individual was laid off, terminated, or retired, the balance due on the loan needed to be paid in full, or a ”coupon book” could be issued to allow the employee to continuepaying monthly to avoid a 1099 and a 10% penality on the entire loan. You need to check with your company to see how your plan is administered.
Generally speaking, most advisors frown on borrowing against a 401(k) because is minimizes the growth you”d realize without such a debt. This is part of your retirement. If you”ve still got a way to go before you hang up your cleats, avoid these loans unless it”s a real emergency.
2006-07-20 12:09, By: francis3, IP: [151.203.237.26]

L2: 401K and Loans
Where I worked, an employee could borrow up to 50% of the balance of the 401(k), up to a maximum of $50K.
If an individual was laid off, terminated, or retired, the balance due on the loan needed to be paid in full, or a ”coupon book” could be issued to allow the employee to continuepaying monthly to avoid a 1099 and a 10% penality on the entire loan. You need to check with your company to see how your plan is administered.
Generally speaking, most advisors frown on borrowing against a 401(k) because is minimizes the growth you”d realize without such a debt. This is part of your retirement. If you”ve still got a way to go before you hang up your cleats, avoid these loans unless it”s a real emergency.
2006-07-20 12:09, By: francis3, IP: [151.203.237.26]