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I plan to retire in the next year and I need to know what happens to a loan repayment to my 401K when I take a final distribution and roll it into an IRA. If I owe $8,000 on a loan and I take the distribution will the $8,000 be treated as a partial distribution subject to taxes and 10% penalty? I am a few years away from 59 1/2 (actually about 56). If it is subject to the taxes and penalty, how do you suggest that I get around it? Thanks!
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