Is this loan payoff considered a distribution?
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Yes, when you have a loan and you leave a company, it is converted to distribution and you would need to file that to pay taxes and and any early withdrawal penalty on it. Turbo Tax will walk you through how to file that.
Yes, when you have a loan and you leave a company, it is converted to distribution and you would need to file that to pay taxes and and any early withdrawal penalty on it. Turbo Tax will walk you through how to file that.
Yes, the 401(k) distribution to pay off a loan is taxable as for any other distribution from a 401(k). This is considered as a distribution as if the 401(k) paid the money to you and you paid off the loan.
If your wife is under age 59 1/2, she is also liable for an early withdrawal penalty of 10%.
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