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PMcMullenCT, you are wrong. The loan repayment is with after-tax dollars. This means that your are taxed while repaying. This repayment money is not kept seperate so you are taxed once it is pulled out at retirement.

Then by that logic you are ignoring the income that NEVER gets taxed AT ALL. The pre-tax money that went into the 401K was taken out as loan proceeds without being taxed. By claiming that the loan repayments are double taxed, you are ignoring the fact that those loan payments are simply replacing pre-tax money in the 401K, which by your logic, were disbursed tax free rather than removed temporarily, and later replaced.

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