New York--
When you borrow money from your 401(k), you repay it with interest. Later when you take money out of the 401(k), say after retirement, the withdrawals are generally taxed as ordinary income, except for that portion that can be attributed to after-tax contributions. Let's assume that all of the contributions to the 401k were in pre-tax dollars. When the loan is repaid, the principal amount amounts to the return to the 401(k) of pretax dollars, but the interest portion of the repayments is clearly coming from post-tax money.
So, my question: During the withdrawal phase of the 401(k), is any portion of the withdrawal which can be attributed to the interest payments on the loan treated as post-tax money?What is the name of your state?
When you borrow money from your 401(k), you repay it with interest. Later when you take money out of the 401(k), say after retirement, the withdrawals are generally taxed as ordinary income, except for that portion that can be attributed to after-tax contributions. Let's assume that all of the contributions to the 401k were in pre-tax dollars. When the loan is repaid, the principal amount amounts to the return to the 401(k) of pretax dollars, but the interest portion of the repayments is clearly coming from post-tax money.
So, my question: During the withdrawal phase of the 401(k), is any portion of the withdrawal which can be attributed to the interest payments on the loan treated as post-tax money?What is the name of your state?
