hi
The government can offset refunds by what it is owed...(the money would go to the student loan program).
Getting a 401k loan can have a lot of negative impact on a person's life. One reason why a person shouldn't consider getting a 401k loan is because a person would have to pay taxes on this loan twice after its been paid back. The first tax comes from a person personal income. The second tax that this person would have to pay is after this person reach retirement this person needs to pay taxes on the money they decide to withdraw from their banking account. As a result a person who borrow this much money will have to pay lots of taxes on this particular loan.
The penalty is 10%. All in all you will pay your tax bracket + 10%. Actually that is incorrect. The question was about a 401k loan. There are no taxes on 401k loans unless you default on the loan. If the loan defaults then yes you would owe 10% penalty plus Federal and State taxes at tax time.
AnswerThere are no taxes on the principal of any loan, student or otherwise.In fact, there are no taxes on the payor of interest on a loan, student or otherwise. (The receipient of interest has taxable income of the amount earned).The interest paid on a loan secured by ones residence, are generally, deductible (the opposite of paying taxes)..
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If you are still employed by the company that sponsors your 401k plan then you will not be eligible to cash out of the plan. Instead, you can see if your plan offers either a 401k plan loan, or a 401k plan hardship withdrawal (not all 401k plans allow hardship withdrawals so you need to ask your plan administrator if your plan has this feature.)If you are no longer employed by the company that sponsors your 401k plan, then you are eligible to get your money out of your 401k plan. You can cash out of the plan, or rollover your 401k plan balance to an IRA. If you choose to rollover your 401k plan instead of cashing out, then you will not have to pay taxes or penalty taxes: rollovers to IRAs are not taxable transactions if you do them the right way.
Student Loan Forgiveness is when a student can't pay a loan that he owes and so the government has money to pay for that loan if he/she is unable to make the payments on it.
If you do not pay back you 401k loan, it will be looked at as a withdrawal. Which means not only will you be taxed on that money this year, you will also have to pay a penalty for early withdrawal.
No, it is a debt not income.
Yes, of course.
Student loan debt consolidation is a way to consolidate student loan debt to the point that money is put in a synthetic grace period to prevent interest.
Generally a very bad idea. You will lose a significant portion of the 401K principal to taxes and penalities for early withdrawal. Also, you are eliminating all future income in retirement. Have you considered taking a loan from your 401K?