2006-08-23 08:42:43 · 7 answers · asked by fdbrown73 1 in Business & Finance ➔ Taxes ➔ United States
Nope, sorry. If you take the money OUT of your 401(k) it is considered a withdrawl and will be taxed as such.
As suggested already, you can take a loan out against it and not incur the penalty, but you will need to pay it back. So, pay back the commercial loan or pay back the 401(k) loan - either way you pay it back, but when you borrow it from your 401(k) the money you borrow is NOT earning dividends, interest, and more money for you!
Here's a great place to visit for some more info:
http://moneycentral.msn.com/articles/retire/basics/4714.asp
2006-08-23 08:57:18 · answer #1 · answered by ibdsassy1 1 · 0⤊ 0⤋
Only if its a Roth 401(k) and you have met the age and time requirements to take tax-free distributions.
A traditional 401(k) is taxable at distribution. You could potentially take a loan from your 401(k) provided the plan allows for loans (not all do). This would not be taxable provided you didn't default on the loan or take a full distribution of your 401(k) account balance while still having an unpaid loan balance.
2006-08-25 00:31:28 · answer #2 · answered by facade 2 · 0⤊ 0⤋
You may be able to take a loan against your 401(k) for this, but you'll have to pay it back (with interest) to avoid penalties & taxes.
2006-08-23 08:46:11 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you meet the requirements for a 'hardship withdrawal' you would be able to avoid the 10% early withdrawal penalty, but you would not avoid any regular taxes on the distribution.
If your plan allows for a loan, it is probably your best option.
2006-08-23 10:06:54 · answer #4 · answered by nova_queen_28 7 · 0⤊ 0⤋
unless the student loan is very high interest do not even considering a 401k loan. Almost certainly would not qualify as a hardship case unless you have other big debts. Just do not do it.
2006-08-24 03:46:53 · answer #5 · answered by vegas_iwish 5 · 0⤊ 0⤋
http://www.nohasslebargains.com/loan/id4.html
Student Loans
Financial Services
2006-08-23 09:08:42 · answer #6 · answered by Anonymous · 0⤊ 0⤋
there is a penalty for early withdrawl and yes you do have to report the money on income tax
2006-08-26 18:05:17 · answer #7 · answered by whitebuffalorider 2 · 0⤊ 0⤋