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ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 686
Experience:  Business Consultant/Accounting Manager
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I am going back to school-an expensive ($23k) fast track IT

Customer Question

I am going back to school-an expensive ($23k) fast track IT school.
Tax wise:
Should I borrow from my 401k knowing that I hope to leave my current employer and be taxed on the outstanding balance, or
Should I take a Salle Mae loan?
How are funds taxed that originate as a loan against the 401k?
What else should I consider?
Roger Ochs
Submitted: 10 months ago.
Category: Tax
Expert:  ABC Accounting Group replied 10 months ago.

I would not take the 401k out. Unless you were staying with your employer, you could take out a loan from your 401k for education. The loan has an interest rate on it, but you are paying the interest back to yourself/your account. The loan is not taxed, unless you leave before the final payment is due. Then, it is taxed as a 401k withdrawal.

If you do leave your employer and do not take out a 401k loan, you can roll over the funds to an IRA (tax-free - within 60 days of when you leave).

I would check the interest rates on a Sallie Mae loan as well (website is Some other loans can be found on the following website:

Let me know if you have any questions.

Expert:  ABC Accounting Group replied 10 months ago.

If you have any questions, let me know. If not, a positive rating is very much appreciated.