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In the simplest example, you would borrow the $10K and put it in a money market account. Over time you would repay the 401(k) from money market; but you would have to pay taxes on the interest you earned. The principal balance would not be taxed since a loan is not income.

Hey, Joel,

Thanks for the explanation. It all still seems fishy to me, but your explanation helped me to understand better what the OP intended.

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