Borrowing from Yourself: Using Your 401k Without Taxes or Penalties
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IRC Section 72(p) allows participants to borrow from their plans on a tax-free basis, provided the total loans do not exceed the LESSER of 50% of the participant's vested plan benefit or
$50,000.
In the example given in the story, only $25,000 of the participant's $50,000 balance would be available for loan.
billwinterberg 2 years ago