Have a Tax Question? Ask a Tax Expert
Hello, a 401k loan, when withdrawn, is not taxable as long as it is repaid on a schedule.
One way to look at it is that since the withdrawal is not taxed, the repayment of the withdrawal is not a deduction
Mark, i took out a withdraw for 40K and used 17K to repay an existing 401k loan....the irs is telling me the 17k is taxable income ... i think they are wrong
These were separate 401ks?
no...it is the same 401k ... i first took a loan, then i took a withdraw (40k), then used 17k to pay the original 401k loan
that is, payoff the original 401k loan from the same 401k account
i am saying that the 17k is non-taxable since it paid an existing 401k loan and went back into my retirement account...to me this is similar to putting the 17k into a separate ira account....at least that is my thinking
Unfortunately, the way you did it would make it taxable
if you have taken the 17K as a loan, it would not have been
but taking it to repay a loan is not the same as a rollever
not saying I agree with the rules, but those are the rules