401K question and taking a loan out of your 401K?
401K question and taking a loan out of your 401K?
When you take out a loan from your 401k and they want you to pay it back, it is added interest, Does the interest go into your bank account or do the 401 K people make that money? And why do we have to pay back that money?
Answers:
Chosen Answer
roadrunner426440: the interest goes into your 401K You have to pay the money back because otherwise it is a taxable withdrawal remember if you have a loan and then lose your job you have a very short fixed period to pay it back in full or it is viewed as a withdrawal Caution is advised here
2008-09-02 05:39:24
roadrunner426440: the interest goes into your 401K You have to pay the money back because otherwise it is a taxable withdrawal remember if you have a loan and then lose your job you have a very short fixed period to pay it back in full or it is viewed as a withdrawal Caution is advised here
2008-09-02 05:39:24
v b: The interest is added to your account balance. While you are borrowing from yourself, you do not have the option not to pay interest.
The 401K plan administrators make their money from fees charged to your account (whether you have a loan or not).
If you fail to pay the money back, you will have a distribution. The distritbution will be subject to income tax and a 10% penalty.
2008-09-02 06:04:19
2008-09-02 06:04:19