Sometimes taking out a loan against your company retirement plan balance is an unavoidable necessity. Fair enough. Desperate times demand desperate measures. But make sure you understand what happens if you fail to repay the loan according to its terms.
Principal residence loans must be used to acquire a residence that will be used as your principal residence, and they can have longer repayment periods. Loan repayments must be in substantially level amounts and must be paid at least quarterly. Finally, an early qualified plan distribution, including a deemed distribution caused by a plan loan default, can trigger the 10% early distribution penalty tax on top of the income tax hit. The 10% penalty applies if you are under age 59½, unless an exception is available.
Another drawback Another thing to keep in mind when considering taking out a plan loan is that your account balance may be irreversibly diminished if you don’t pay the loan back. That’s because the tax law imposes strict limits on how much you can contribute to your account each year. Also, you may not be allowed to make annual contributions to your account while your plan loan is outstanding.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Before Panicking Over Memory Loss, Read ThisForgetful moments themselves should only raise concerns when they occur frequently and cause consistent interference with daily activities, says Health and Retirement Expert Marc Agronin.
Source: WSJ - 🏆 98. / 63 Read more »
Source: Fashionista_com - 🏆 474. / 51 Read more »
Source: Slate - 🏆 716. / 51 Read more »
Source: CNBC - 🏆 12. / 72 Read more »
Source: POPSUGAR Fitness - 🏆 401. / 53 Read more »