Idea, can I do this?
Loan from my 401k, lets say $20,000
No tax, no penalty... yes I must pay it back with interest to myself.
What if I take this $20,000 and open a Roth IRA.
Leave it there for the next 6 years...
Could I then withdraw this $20,00 (hope it would be more by then)from the Roth IRA without tax or penalty?
I would be 60 at this time.

Most companies have no restrictions on what you use your loan for, so yes this will work as long as you can pay the loan back within the required time frame (typically 3 years). Be aware that if you leave your job (for example if laid off) you are required to pay back the outstanding balance within 60 days or else the loan is redefined as a withdrawal, and you will owe both income tax and early withdrawal penalty on the balance of the loan. So whenever you take a loan there is a bit of a risk.

Yes... I understand the risk part.
In the time it takes to repay, I would have $20,000 plus interest back in my original 401k, plus $20,000 in my new Roth IRA.
Main goal is that I can withdraw this $20,000 without taxes or penalty.

Quote:

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Originally Posted by klattu

Main goal is that I can withdraw this $20,000 without taxes or penalty.

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Since you will be 60 at the time of withdrawal from the Roth IRA, and the account is greater than 5 years old at that time, there should be no penalty.

There is one catch however - you can only contribute $6K/year to a Roth IRA (it would be $5K if you were under 50 years old).

Why not simply contribute $6K/year to a Roth IRA and leave your 401(K) alone?

Why do you assume your Roth will make so much extra money more than your IRA, not sure why you either don't merely put the extra money into the IRA or just Roth

After the cost of interest paid on the loan, it would take a serious eat at the profit from the IRA itself.