ST Alpha - "if you feel comfortable with your job security, and understand the taxation issue, there is absolutely nothing wrong with doing this" (Reading a Post)

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In response to "STIS -- What do we think of the idea of taking a loan from an 401(k) in order to pay down credit card debt?" by znufrii

if you feel comfortable with your job security, and understand the taxation issue, there is absolutely nothing wrong with doing this

Posted by decline (aka Decline) Jun 15 '09, 07:44

the taxation issue being that you will get taxed twice on the money you take out. First, your loan repayments are aftertax money and second when you take the money out at retirement you will be taxed again.

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that's good to know. thanks. - znufrii Jun 15, 07:46 4
- also, I'm curious how they would handle a Roth conversion if there is a loan balance outstanding - znufrii Jun 15, 07:52 3
  - the loan would not transfer over and would be treated as a distribution -- nm - decline Jun 15, 07:54 1
    - makes sense. thanks. -- nm - znufrii Jun 15, 07:54
  - I doubt you could do a conversion on funds that have been borrowed against. - TFox Jun 15, 07:53

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if you feel comfortable with your job security, and understand the taxation issue, there is absolutely nothing wrong with doing this

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