Posted on: 08th Apr, 2012 11:57 pm
My friend has a loan on his 401K. He now wants to do a hardship withdrawal for home buying. He needs to know whether or not there is any benefit to paying the existing loan off? If he did, I would think that would increase the amount available to him, yes?
Hi Candle,
You're correct. If your friend pays off the existing mortgage that he has taken on his 401k, it will be easier for him to get a comparatively bigger loan when he applies for a hardship withdrawal.
Thanks
You're correct. If your friend pays off the existing mortgage that he has taken on his 401k, it will be easier for him to get a comparatively bigger loan when he applies for a hardship withdrawal.
Thanks
Hi Candle!
Welcome to forums!
I agree with James Hogg. If your friend pays off the amount of loan, then he will be able to take out a bigger amount of loan as his hardship withdrawal. However, it should be kept in mind that if he is not 59 and 1/2 years of age, then he will be liable for paying 10% penalty.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
I agree with James Hogg. If your friend pays off the amount of loan, then he will be able to take out a bigger amount of loan as his hardship withdrawal. However, it should be kept in mind that if he is not 59 and 1/2 years of age, then he will be liable for paying 10% penalty.
Feel free to ask if you've further queries.
Sussane