[monaz00]

I borrowed 10k from my 401k 2 years ago and have been paying on it every pay period. I recently got a new job and will have to claim the unpaid portion of my up coming taxes, how does this process work? I would like to come up with an estimate on how much I will have to pay back so I can plan ahead.. Any information will be greatly appreciated!

Thank you
Mona

[ScottGem]

Why not pay off the loan with a short term loan. Then roll the money over into your new plan and take a loan against the rollover to pay off the short term loan. In that way, you incur no penalty or tax liability. I've done that at least twice when changing jobs.

But if you don't, your old company will send you a record of the balance as a inservice distribution. You will have to pay 10% of that balance as penalty. In addition, the amount of the balance will be added to your taxable income for the year and you will have to pay taxes on it depending on your tax bracket.

[AtlantaTaxExpert]

Scott's suggestions is a GREAT idea! Do it now.

If you cannot, then your old employer will issue you a Form 1099-R to show the distribution amount, what is taxable, and how much was withheld. This form also goes to the IRS and the state tax department, so they will be looking for you to account for it on your tax return.

Expect to pay at least 30% and maybe as much as 50% of the distribution in state and federal taxes.