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Updated about 9 years ago on . Most recent reply

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Dona Lontok
  • Frisco, TX
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Will borrowed 401k money get double taxed?

Dona Lontok
  • Frisco, TX
Posted
Hello BP, I have this nagging thought in my head: will borrowing from one's 401k cause double taxation? Since it's being paid back with after tax dollars, then get's taxed when it is distributed at retirement.

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Dave Toelkes
  • Investor
  • Pawleys Island, SC
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Dave Toelkes
  • Investor
  • Pawleys Island, SC
Replied

The principal AND the loan interest you pay back into the 401k are paid back with after tax dollars.  When withdrawn from the 401k in retirement, that amount will be taxed again.

in short, the answer to your question is YES.

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