I am giving my employeer my 2 weeks December 14, 2007 and I currently have a 401k loan, will this loan be added to my upcoming taxes 2007 or will the loan be claimed on my 2008 taxes?

Thank you for any information that you can give! It is greatly appreciated!

Mona

You should ask your plan administrator this question, since the specific rules for how loans are treated vary widely from plan to plan. In many cases if you leave your employer you have something like 60 days to pay back the loan. If you don't pay it back, the amount of the loan will then count as a distribution to you, so that means some time in February 2008 the loan would count as income to you. Now, the specific rules of your plan may vary from this - it's possible that the loan becomes due immediately upon your separation from employment, in which case the date of your early withdrawal is December, 2007. You will have to pay income tax on this amount plus the 10% early withdrawal penalty.

I would say its unlikely to be part of 2007 income. Plan admins just don't work that fast. Plus, as be, said you may have a grace period in which to pay it back. If you are going to a new job that will also have a 401K, I would suggest that you take a short term loan to pay off your 401K loan, then get your distribution rolled over into your new plan and take out another 401K loan to pay of the short term loan. I've done that at least twice.

All good advice; nothing to add.