Paying with IRA/401K

[Ginger1217 5]

I was wondering has anyone borrowed money through their IRA/401K? I'm wondering how that will work at tax time. I know there will be tax on the money but also a credit for medical expense...

Thanks...

[on the fence 2 34]

i am not sure if every 401k works the same, but i am able to borrow from mine and pay myself back weekly. without a penalty it comes out of my weekly check.

[wannaBthinsoon 1,634]

@@on the fence 2 I did that, too, a few years ago at a previous job. Then, before I had it paid off, I was layed off, and I was penalized for that money. That HURT! Think long and hard about it, just saying.

[Gaintheworld 19]

I'm a pension administrator. Talk to your hR or plan rep. Each plan is different in the types of loans and withdrawals that are allowed. Loans are not taxable to you unless you default on them or terminate employment. Then the unpaid balance becomes taxable income in the year of default. Loan payments are deducted from payroll on an after tax basis. Some plans offer hardship distributions where you can make a withdrawal to pay medical expenses. However hardships are taxable income in most cases. I would recommend talking to your tax preparer about how much to have withheld for taxes on your hardships. Also beware that you can sometimes throw yourself into a higher tax bracket with the income from a hardship.