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UPS Retirement Topics
What are penalties for non repayment of 401K loan?
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<blockquote data-quote="UpstateNYUPSer(Ret)" data-source="post: 1228073" data-attributes="member: 12570"><p>This is the right answer. The loan will be treated as a withdrawal and as such will be taxed as ordinary income. They will also tack on a 10% penalty, which you pay along with your taxes.</p><p></p><p>You can repay with your own funds; however, you must repay the entire balance in a lump sum----no payment plans allowed. Payment of a partial amount now could reduce the amount that you would have to pay taxes on later.</p><p></p><p>There are no ways around the penalties.</p><p></p><p>This is from the Prudential website:</p><p>You must repay the loan in full within 90 days after termination or it will be considered a taxable event, subject to all current taxes and any early withdrawal penalties. </p><p></p><p>You can call 1-800-537-0189 but I am afraid that they will tell you the same thing that I just did. (They might use bigger words but the message will be the same)</p><p></p><p>You may want to Google "IRS Payment Plan".</p></blockquote><p></p>
[QUOTE="UpstateNYUPSer(Ret), post: 1228073, member: 12570"] This is the right answer. The loan will be treated as a withdrawal and as such will be taxed as ordinary income. They will also tack on a 10% penalty, which you pay along with your taxes. You can repay with your own funds; however, you must repay the entire balance in a lump sum----no payment plans allowed. Payment of a partial amount now could reduce the amount that you would have to pay taxes on later. There are no ways around the penalties. This is from the Prudential website: You must repay the loan in full within 90 days after termination or it will be considered a taxable event, subject to all current taxes and any early withdrawal penalties. You can call 1-800-537-0189 but I am afraid that they will tell you the same thing that I just did. (They might use bigger words but the message will be the same) You may want to Google "IRS Payment Plan". [/QUOTE]
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What are penalties for non repayment of 401K loan?
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