2006-09-24 11:22:38 · 6 answers · asked by Tetonka 3 in Business & Finance ➔ Taxes ➔ United States
Since you borrowed from your 401k, it is not income unless you don't pay it back. Then, any amount not paid back is subject to the 10% penalty for an early withdrawal and it is added to your taxable income.
2006-09-24 12:53:58 · answer #1 · answered by Steve 6 · 1⤊ 0⤋
Since U borrowed from your 401K there is no tax "penalty" (usually 20%) but you must pay the money back to your account at whatever interest rate you plan states. The money borrowed will be considered normal income come tax time.
2006-09-24 19:11:55 · answer #2 · answered by Anonymous · 0⤊ 1⤋
With many 401K programs up to 50 percent of the account balance, but no more than $50,000, can be borrowed. Money borrowed must be repaid. If not repaid, there could be substantial tax consequences. 20% withholding and 10% penalty. check with your plan administrator to verify .
2006-09-24 18:31:42 · answer #3 · answered by summerbrze 2 · 0⤊ 0⤋
This is a very good question.My husband had to borrow from his 401k to pay off a student loan that was in his name.According to our state laws,he had to pay at least 20% as he took a early withdraw.Since you took a loan out but plan on paying the loan back, you will result ending up paying principle + interest which can arrainge from 5% up to 20% of the amount you had borrowed.
Good luck!
2006-09-24 20:29:16 · answer #4 · answered by wsm0628 3 · 0⤊ 0⤋
Steve is correct. As long as you pay it back on the agreed-upon schedule, there are no tax consequences - no penalty and it's not taxable either.
You sure got a lot of widely-varying answers to your question....
2006-09-24 22:45:37 · answer #5 · answered by Judy 7 · 0⤊ 0⤋
the normal 40% on a bonus. actually i think you count it as income and you will pay your normal tax on it unless you push another tax bracket
2006-09-24 18:24:41 · answer #6 · answered by gsschulte 6 · 0⤊ 1⤋