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I borrowed from my 401K to purchase a home. My 401K plan states that when you leave the company the loan becomes due and payable. I know that usually means either you pay off the loan in cash, or a taxable event occurs. (at least that's what I thought.)

A friend of mine is telling me that because I used the loan proceeds to pay for a home, there is no taxable event if the loan isn't paid back when I leave. Could this possibly be true, or is she full of beans?

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