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- I don't know how to explain this clearly but I'll try. If you withdraw $10K in pre-tax $$, you will need to earn $10K +15% to replace it with after-tax dollars.

MK: You're right, I will have to earn my loan +15% to repay the loan w/ after-tax contributions, but I am essentially borrowing against my income throughout the year. I don't think it's double taxed in that way, which takes me to your next point...

- Also, I think you will be taxed on it again in the future when you withdraw it for good. Why pay taxes on it twice?

MK: This is something I have to look into. Are loan repayment contributions taxes differently at the end of the 401k than income contributions? If not, than no problem, if so, I may be penailzed later on. Good point.

- Also, check with your plan administrator. Our plan will not allow you to continue to make contributions if you have a loan so you lose the contributions and earnings for the time frame of the loan.

MK: We are permitted to continue to make contributions & loan payments concurrently. The contributions are matched normally.

- Also, if something happens and you lose your job, God forbid, that note is due and payable. If you can't pay it, you have to pay the taxes on it plus a 10% penalty. I hope this helps.

MK: This one is delicate. Since I invest the money it's still available. Since I primarily invest the contributions in income DRIPs, the money isn't available for (worst case) three months. All my investments, by sheer chance, pay dividends on the same day; three-month intervals centered around 15-Jan. All my DRIPs become available for withdrawl on the same date! I have to keep enough money in my trading account to cover a quick need. Good heads up, I will have to be certain to maintain that discipline.

MK: Thanks a million for your input, it's great food for thought. I'm like you, I'm a bit hazy on the details. Hopefully we can suck in an expert ;-)
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