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I took out a loan on my 401k. I am actively repaying on the loan. Do I have to pay the additional 10% for early withdrawl?
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Expert Reviewed
A loan is not a withdrawal and no part of the loan is taxable or subject to penalties, as long as the loan is in good standing.
If you stop making repayments (such as because you leave the company) the outstanding balance is treated as a distribution and is subject to tax and penalties at that time.
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