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  #1  
Old 08-14-2011, 07:03 AM
Anonymous
 
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Default 401k Loan & Resignation

Does anyone have recommendations for paying back a 401k loan if you resign from your company? Do you just take a hit, and pay the taxes on it? Or if not enough cash, borrow from home equity loan to pay it off before resigning?

I have limited time to decide so please spare the comments about never borrowing from your 401k. I viewed it as a positive because the interest I was paying went right back into my 401k. In essence, I was borrowing from myself. Still learned a valuable lesson since I need to come up with cash quickly.
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  #2  
Old 08-14-2011, 09:40 AM
Anonymous
 
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Default Re: 401k Loan & Resignation

I'd pay it back if I could ... you're talking as much as a 45% tax bite (plus state taxes if applicable), which includes the 10% penalty tax rate. Unless your employer plan allows you to continue to pay the loan after you resign (and I'm not sure if any plans allow that), trying to come up with the cash to pay off the loan would be best.

Otherwise, I'd borrow to cover the loan (either home equity or unsecured loan, if possible).
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Old 08-14-2011, 07:00 PM
Anonymous
 
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Default Re: 401k Loan & Resignation

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I'd pay it back if I could ... you're talking as much as a 45% tax bite (plus state taxes if applicable), which includes the 10% penalty tax rate. Unless your employer plan allows you to continue to pay the loan after you resign (and I'm not sure if any plans allow that), trying to come up with the cash to pay off the loan would be best.

Otherwise, I'd borrow to cover the loan (either home equity or unsecured loan, if possible).
That's a lot in taxes..... too much. I don't think my company will allow me to continue paying it back since it comes directly out of my paycheck. Guess it's cash from my savings plus borrowing or only the latter.

Thank You!
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  #4  
Old 09-15-2011, 07:39 PM
Anonymous
 
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Default Re: 401k Loan & Resignation

You need to pay in full within ~30 days of resignation or termination. The tax hit is huge so pay up. Do not take a home equity loan...that is stupid.
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  #5  
Old 09-15-2011, 08:29 PM
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Default Re: 401k Loan & Resignation

Quote:
Originally Posted by Anonymous View Post
Does anyone have recommendations for paying back a 401k loan if you resign from your company? Do you just take a hit, and pay the taxes on it? Or if not enough cash, borrow from home equity loan to pay it off before resigning?

I have limited time to decide so please spare the comments about never borrowing from your 401k. I viewed it as a positive because the interest I was paying went right back into my 401k. In essence, I was borrowing from myself. Still learned a valuable lesson since I need to come up with cash quickly.
You didn't read the rules?
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  #6  
Old 04-13-2014, 01:54 PM
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Default Re: 401k Loan & Resignation

Sell your soul.
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