I have about 25K IN MY 401K, and need some of it to close of escrow. I work for So Cal Edison. Does anyone here know how this works? I called them but they were closed so I would appreciate a heads up. How much can I cash out,... how do I repay it?
2006-12-12 18:03:27 · 4 answers · asked by Photographer 6 in Business & Finance ➔ Personal Finance
No one has answered my question. How much can I take out and how would I pay back, do I get a loan and does that loan get put on my credit report?
2006-12-12 18:17:39 · update #1
No one has answered my question. How much can I take out and how would I pay back, do I get a loan and does that loan get put on my credit report?
2006-12-12 18:17:40 · update #2
Contact the people who manage your account instead of asking a bunch of strangers. You can get definitive answers in a few minutes. Enjoy your new digs!
2006-12-13 00:51:58 · answer #1 · answered by Big R 6 · 0⤊ 0⤋
The beauty of loans against your 401k is that you are repaying yourself. The plan will set an interest rate (usually 1% above prime) as the loan rate. The downside is that the money you are borrowing is likely to be pretax money. However, the loan repayments are going to be after tax money. So, when you finally get around to retiring - the money will have been taxed 2x when you finally get it. You paid tax the first time when it went into the plan, and it is taxed again when before it is paid back into the plan.
Other things to be aware of - if you seperate from service (quit, get fired) you are required to pay back the full amount of the loan to the plan. If you do not, the loan will be deemed a distribution and you will be subject to federal and state taxes + a 10% penalty for early withdrawals.
So, words to the wise - be careful when securing a long-term primary residence loan against your 401k plan. They are a great source of money - but can cost you later on.
2006-12-12 18:13:08 · answer #2 · answered by Jon S 2 · 0⤊ 0⤋
They'll let you know how to pay back; by your numbers you are eligible to take out at least up to 3/4 of your 401K. I suggest you think over what you need to close your escrow and anything you need to freshen the house (landscaping, paint, new furnace, furniture, etc) before you apply for the loan first. Congrats!
2006-12-12 18:08:30 · answer #3 · answered by miladybc 6 · 0⤊ 0⤋
no sure how much you can borrow but you can and you repay yourself with interest. so not a bad option if you can do it. i know you could pull 5k easy.
2006-12-12 18:06:41 · answer #4 · answered by gsschulte 6 · 0⤊ 1⤋