Can I get a second loan from my 401k without a tax penalty ?
jpayaso25 asked:
I already have a loan but have run into to some tough times and now Im faced with having to get another loan. I have been told that I may get a tax penalty for the second loan , is this true ?
Jacqueline
I already have a loan but have run into to some tough times and now Im faced with having to get another loan. I have been told that I may get a tax penalty for the second loan , is this true ?
Jacqueline
You need to talk to your plan administrator. 401K’s only allow you to take out a percentage of your balance temporarily. You have to pay it back with interest in a certain time frame. So, you need to talk to your plan administrator and see what you can do. If you take the money out and don’t pay it back, you are subject to 10% tax penalty and have to pay income tax on top of that!
So, get the right advice-talk to the plan administrator, who knows exactly where you stand.
Most 401k providers will only loan you a certain amount of money without any penalties, They will tell you what the magic number is, call them.