Ask Experts Questions for FREE Help !
Ask
    Sweet Indigo's Avatar
    Sweet Indigo Posts: 5, Reputation: 1
    New Member
    		  
    #1

    Feb 10, 2010, 12:38 PM
    Distribution and loan payoff simultaneously 401k
    Several years ago I borrowed from my 401(k). I am now over the minimum withdrawal ago and would like to know if it is possible for me to withdraw and repay simultaneously. I've been laid off and would like to avoid the initial loan being turned into a distribution if I can't pay the loan balance.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #2

    Feb 10, 2010, 02:16 PM

    I don't understand what you mean by "withdraw and repay simultaneously" - please clarify. If you no longer are employed at the job where you took the 401(k) loan, you must either repay the loan or ot will be reclassified as a withdrawal (since only active empollyees can have a loan).
    Sweet Indigo's Avatar
    Sweet Indigo Posts: 5, Reputation: 1
    New Member
    		  
    #3

    Feb 10, 2010, 03:12 PM
    My 401(k) is still with my previous employer and as long as I make payments on the loan, the loan is not being classified as a withdrawal. It is still classified as a loan. I am asking if I can take withdrawals (and since I am short of cash, use the withdrawals to cover the loan balance).
    Thanks.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Mar 4, 2010, 02:43 PM
    That's robbing Peter to pay Peter. The custodian will not let you do it once they figure out what is being done.
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #5

    Mar 4, 2010, 02:57 PM

    I don't see any problem with it.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Loan payoff [ 42 Answers ]

I was in an auto accident which was the other persons fault totaling my car. Their insurance company only wants to give me the actual cash value of my vehicle which is far less than what I owe. Does their insurance have to pay what I owe or just the blue book value and do they have to replace my...

Loan Payoff at 401k rollover [ 1 Answers ]

NOT HAPPY HERE! Here's the deal. Example is for clarity. Total 401K is $100,000.00 Outstanding loan is $15,000.00 That's it, now I lost my job of 30 years.

Loan Payoff at 401k rollover [ 1 Answers ]

Our plan administrates paid off an existing loan in my 401K before it was rolled over to an IRA. As of today feb 2, I have not received a 1099R. All other withdrawals from the rollover IRA I have received the 1099R's. QUESTION IS: Should I receive a 1099R for the loan payoff also. THANKS ...

Early Distribution from 401k/Loan not repaid [ 4 Answers ]

Hi, Thanks for taking the time... live in NJ and worked in NJ... here is my question, I took a hardship withdrawal loan from my 401k... two years ago in early 2005. Approximately $4,000. I paid back about 1000k back to my own 401k. In Jan of 2006 I left the company and decided I was going get...

View more questions Search