Comments on: 401k Layoff Trap http://www.doughroller.net/retirement-planning/401k-layoff-trap/ Money Management and Personal Finance | The Dough Roller Sun, 12 Feb 2012 23:24:19 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: DR http://www.doughroller.net/retirement-planning/401k-layoff-trap/comment-page-1/#comment-15733 DR Mon, 16 Nov 2009 11:59:25 +0000 http://www.doughroller.net/?p=5637#comment-15733 Dolores, you'll want to confirm this with your 401(k) plan administrator, but I believe that if you fail to repay the loan, it is simply treated as a distribution. You'll pay taxes on the amount of the loan just as if you simply withdrew the money. Because your are older than 59 1/2, I don't believe you'll pay any penalties, but again, your plan administrator can confirm this. Dolores, you’ll want to confirm this with your 401(k) plan administrator, but I believe that if you fail to repay the loan, it is simply treated as a distribution. You’ll pay taxes on the amount of the loan just as if you simply withdrew the money. Because your are older than 59 1/2, I don’t believe you’ll pay any penalties, but again, your plan administrator can confirm this.

]]> By: dolores galizia http://www.doughroller.net/retirement-planning/401k-layoff-trap/comment-page-1/#comment-15728 dolores galizia Sun, 15 Nov 2009 15:14:50 +0000 http://www.doughroller.net/?p=5637#comment-15728 i am over 65 and I borrowed from my 401k if I decide to retire before the loan is paid back can they deduct the money from the balance of my plan or is the loan a separate issue. i am over 65 and I borrowed from my 401k if I decide to retire before the loan is paid back can they deduct the money from the balance of my plan or is the loan a separate issue.

]]> By: Scott Lovingood http://www.doughroller.net/retirement-planning/401k-layoff-trap/comment-page-1/#comment-13462 Scott Lovingood Tue, 07 Jul 2009 15:51:15 +0000 http://www.doughroller.net/?p=5637#comment-13462 401k Loans are just another area that aren't fully explained to people much like early withdrawals. I deal with people every tax season who didn't understand the total taxes that were going to be due on a withdrawal made from their 401k. The 10% penalty is often a shocker, especially for those that chose to not have any taxes held out. A 401k Loan can be a good thing if used correctly and with full understanding of the risk. One change I wish Congress would make is making loans not default when you are let go and allowing withdrawals from your 401k without penalty if you are unemployed. I think both of them would help many people out in the current recession. 401k Loans are just another area that aren’t fully explained to people much like early withdrawals. I deal with people every tax season who didn’t understand the total taxes that were going to be due on a withdrawal made from their 401k. The 10% penalty is often a shocker, especially for those that chose to not have any taxes held out.

A 401k Loan can be a good thing if used correctly and with full understanding of the risk. One change I wish Congress would make is making loans not default when you are let go and allowing withdrawals from your 401k without penalty if you are unemployed. I think both of them would help many people out in the current recession.

]]>