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['Retirement Benefits']
['401(k) loans', 'Retirement Benefits']
01/02/2024
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Copyright 2024 J. J. Keller & Associate, Inc. For re-use options please contact copyright@jjkeller.com or call 800-558-5011.
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Institute401(k) loansAssociate Benefits & CompensationRetirement BenefitsRetirement BenefitsHuman ResourcesEnglishAnalysisFocus AreaCompliance and Exceptions (Level 2)USA
401(k) loans
['Retirement Benefits']
- Employees can borrow loans from their 401(k) account balance.
Employees’ 401(k) plans may allow them to borrow from their account balances. However, employees should consider a few things before taking a loan from their 401(k)s.
If the employee doesn’t repay the loan, including interest, according to the loan’s terms, any unpaid amounts become a plan distribution to them. The plan may even require employees to repay the loan in full if they leave their jobs.
Generally, employees have to include any previously untaxed amounts of the distribution in their gross incomes in the year in which the distributions occur. An employee may also have to pay an additional 10 percent tax on the amount of the taxable distribution, unless the employee:
- Is at least age 59 ½, or
- Qualifies for another exception.
Any unpaid loan amount also means the employee will have less money saved for retirement.
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retirement-benefits
retirement-benefits
FOUNDATIONAL LEARNING
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Retirement plans
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Bona fide profit-sharing plans or trusts and bona fide thrift savings plans
InstitutePension Benefits Guaranty Corporation (PBGC)Employee Retirement Income Security Act (ERISA)Associate Benefits & CompensationRetirement BenefitsDefined benefit planRetirement BenefitsHuman ResourcesEnglishEmployee Benefits Security Administration (EBSA)AnalysisFocus AreaCompliance and Exceptions (Level 2)USA
Employee Benefits Security Administration (EBSA)
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Employee Retirement Income Security Act (ERISA)
InstitutePension Benefits Guaranty Corporation (PBGC)Employee Retirement Income Security Act (ERISA)In Depth Sub Topics (Level 4)Associate Benefits & CompensationRetirement BenefitsSummary plan descriptions (SPDs)USARetirement BenefitsEnglishEmployee Benefits Security Administration (EBSA)AnalysisFocus AreaHuman Resources
Summary plan descriptions
InstitutePension Benefits Guaranty Corporation (PBGC)Employee Retirement Income Security Act (ERISA)Associate Benefits & CompensationRetirement BenefitsDefined benefit planRetirement BenefitsHuman ResourcesEnglishAnalysisFocus AreaCompliance and Exceptions (Level 2)USA
Pension Benefits Guaranty Corporation (PBGC)
InstituteSaver's CreditAssociate Benefits & CompensationAutomatic enrollmentDefined contribution planRetirement BenefitsPension Protection Act (PPA)Defined benefit planRetirement BenefitsHuman ResourcesEnglishIRA - TraditionalAnalysisFocus AreaCompliance and Exceptions (Level 2)USA
Pension Protection Act (PPA)
- Employees can borrow loans from their 401(k) account balance.
Employees’ 401(k) plans may allow them to borrow from their account balances. However, employees should consider a few things before taking a loan from their 401(k)s.
If the employee doesn’t repay the loan, including interest, according to the loan’s terms, any unpaid amounts become a plan distribution to them. The plan may even require employees to repay the loan in full if they leave their jobs.
Generally, employees have to include any previously untaxed amounts of the distribution in their gross incomes in the year in which the distributions occur. An employee may also have to pay an additional 10 percent tax on the amount of the taxable distribution, unless the employee:
- Is at least age 59 ½, or
- Qualifies for another exception.
Any unpaid loan amount also means the employee will have less money saved for retirement.
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Copyright 2024 J. J. Keller & Associate, Inc. For re-use options please contact copyright@jjkeller.com or call 800-558-5011.