Unpaid 401K Loans
August 31st, 2008 By Peter G. Miller
Question: What happens if I do not repay my 401k loan?
Answer: Not re-paying a 401K loan raises two major problems.
First, there is less money available for your retirement. This should be regarded as a serious matter.
Second, while you can borrow against many 401K programs, if money is simply withdrawn there is typically a 10-percent penalty plus regular income taxes for those who have not yet reached age 59.5.
Check with your plan administrator and tax adviser for specifics, and be aware that 401K withdrawals can be an expensive way to acquire funds when not repaid.
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