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JAFO writes:

Individual 1 borrows from retirement plan, at 8%, and repays --- using after-tax dollars. When those dollars are withdrawn, the the withdrawal is subject to income tax.

Individual 2 (twin brother to individual 1) borrows from a bank, unsecured, personal loan in same amount as indiviudal 1. Dollars left in the plan that were not borrowed are invested in corporate bond paying 8%. When bank loan is repaid, after-tax dollars are again used to make the payment. When the dollars are withdrawn from the retirement plan, those dollars are taxable.

Individual 2 is NOT borrowing HIS OWN money and is NOT paying himself interest, whereas Individual 1 is. Therefore, IMHO it is complete lunacy to attempt to claim there is no double taxation issue here. However, I can see we will never agree on that issue, so I also concur that the argument is much ado about nothing. The idiot shouldn't borrow from a tax deferred plan to begin with. :-)

And FWIW I think your or my memory is failing for I recall no such conversation or debate with you before on this issue. Not that it would have gone any differently, though. :-)


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