Hello all
I am 37 and I took a loan from my 401k (bad move on my part, never do that again) figuring I wouldn't be leaving the company for a while. Well it end up I did for another job. I now owe $8300 or be taxed and pay penalties. What I am wondering is what would the tax and penalties be in dollars? I am trying to decide is weather I pay the penalty and taxes or pay off the loan. I don't know which is better. Any pros and cons of each?
Thanks in advance.
ehat

First off, I disgaree about the loan. Its one of the best ways of utilizing 401K money. Your mistake was in the way you handled the switch between jobs. I've switched jobs while I had an outstanding loan. What I did was borrow the money to pay off the loan on a short term basis. I then repaid the loan, did a rollover of the account into my new company's plan, took a new loan against that plan and repaid the short term loan.

If its not too late, you might be able to do something similar.

If it is, you will need to pay a 10% penalty on the $8300. In addition it will be added to your income for the year and be taxed based on whatever tax rate you are assessed under.