Okay, walk me through this scenario. Let's say I take out a $30,000 401k loan at 6.5% interest. I set up a repayment period of 36 months. After 25 months, I separate from my company - and at that time owe approximately $10k. A few months after separating from my company, but before filing my tax return for that tax year - I pay the loan back in full. Now since I paid the post-separation balance of $10k with money that I already paid taxes on, would I get to take that $10k as a deduction on that years tax return? Or, would my 401k account now have some money that is post-tax mixed with money that is pre-tax? If the latter, what would happen if I rolled that 401k into an IRA?
