401K Questions

[SaigonK]

So I pulled the cash out of my 401k to put towards my new house purchase. No big deal, I plan on getting back into it. But one thign i noticed that i wasnt sure about...and maybe someone here can clear it up...

I had a loan taken out whilst I was getting my divorce to pay my lawyer, it was for $2500.
Well I still see the loan details in my plan, and i am wondering if that loan goes away or do i have to keep paying it? I pulled out of the plan with this general hardship withdrawl, so if I do have to keep paying the loan, i am assuming that the payments will make my total go back up again...


Anyone know?>

 

[rahvin]

Boy your in for a suprise when the demand for baloon payment comes. You should really ask these questions before you do what you did.

 

[radioouman]

I don't understand your question. Is this about a home loan, a divorce, or a 401k?

 

[SaigonK]

Its about my 401k, and I already know the answer.

Basically here is the scenario

I have 10,000 in my 401k, but I have borrowed $2000 of it, I can pull out 8,000 because that is my available total.
The other 2,000 i still have to "pay back" to myself. Thus my balance will go back up to $2000 after the loan is finished.

This is not about the house...and balloon payments...WTF are you talking about?

 

[SoulAssassin]

Unless you're in a real bad financial situation, taking a loan on your 401k is one of the worst loans you can take even to put towards a house payment. Even if it's deductible, you just paid income tax on that $2000...assuming for two seconds you're in the 25% tax bracket you can kiss $500 good bye. You would have been better off taking a $2K BT offer at a promo rate on a credit card even if the rate was higher.

 

[Night201]

I agree. pulling out of your 401k was not too smart!

Update: Here is a link to show you how much you lost. For me, if I borrowed $2,000 and paid it back in a year, I would have $20,000 less by the time I retire - all for a $2,000 loan!