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A downside to loans that most people ignore is double taxation. Remember, the amount you borrow is tax deferred, but the dollars you use for repayment are after-tax. For the principal, that is no problem since it is a wash, the tax isn't paid until a distributable event.

The interest however goes toward the loan payment as after tax money. When you reach your distributable event, you pay tax AGAIN.

401(k) loans are viewed as "free" loans by the public, but the fact is your total interest paid on the loan is taxed at a rate likely to exceed 50%.

Be careful!
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