[quote=UCguy]
Here is a question. Let’s say I borrow 50K and all of a sudden I have to repay and can’t (at least not totally) – so I take early distribution and taxes and penalties. How much is are the penalties ? 5K (10%)? Keep in mind that one third of that money came from the company matching (50 cents for my 1 $).
By that time I would probably pay off some of it, and probably still pay some of it, and after I am forcred to take the early distribution, I don’t have to pay my 401k loan.[/quote]
My understanding is it’s a 10% penalty on the unpaid portion (regardless of whether it was your contribution, company matching, or gains on either of those… it’s all one big blob.)
And you owe income tax on the unpaid portion – in addition to that 10% penalty. So factor that in.
