Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 7, 2019 3:59:44 PM

401k Loan? Can you deduct the interest from the Loan? How?

0 2 1230
2 Replies
Expert Alumni
Jun 7, 2019 3:59:48 PM

No, you cannot deduct interest which you pay on your 401(k) loan.

New Member
Jun 7, 2019 3:59:49 PM

There's an exception: if you are using the loan to finance, say, a rental property AND the loan proceeds are coming from funds that were not your own elective deferrals, then the interest expense would be deductible, provided that you could provide proof of the funds use through interest tracing.

Essentially, it's only deductible for certain uses AND only if the funds being loaned are your employer's match / profit sharing, etc.