I borrowed out of my 401k to start a business but it didn't pan out . Any suggestions? Thanks in advance
Pati, I'm sorry to hear about your business failure.
Personal loans from 401k must be typically paid over a period of 5 years so you have some time before it has to be paid off. However regular amortized payments must be made.
If you default the outstanding balance will be considered a distribution therefore taxes and penalties would apply. More info here:
Thanks @Dmitriy Fomichenko . I'll look into it
Also, the following grace period applies to 401k loans.
Effective January 1, 2002, Treas.Reg.1.72 (p)-1, Q&A 10, provides for a cure period that allows a loan participant to avoid an immediate deemed distribution following a missed payment. The cure period may not extend beyond the last day of the calendar quarter following the calendar quarter in which the required payment was due.
I took money out of my 401k to buy a bld. Was counting on the sale of another bld to pay it back (this was early investing days)
Made it literally the day before I would have been smacked around by IRS.
Someone said 5 years? I remember it being like 6 months.