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skinnyfong: "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.

Many people don't think about this double taxation when thinking about taking the loan."

I agree that skinnyfong is describing the situation correctly, but I think it irrelevant. All personal loans are paid back with after-tax income. All dollars withdrawn from the retirement account are taxable upon withdrawal. These dollars are no different.

The bigger issue is the opportunity cost issue raised in the prior post and, in all likelihood, the risk of a deemed distribution if job is lost for any reason. As hbogart points out, the $2000 Roth contribution can be withdrawn at any time if this becomes an issue.

Regards, JAFO
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