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Hi Tom,

Yes you would pay the loan back with after tax dollars. No the interst you payback on this loan is not tax deductible.

Yes you will be taxed on that money when you withdraw it at retirment.

I am assuming you checked with plan about taking out loans, so that part won't be a problem.

Is it a smart move? How much is that tax savings worth to you? If it saves you $200 dollars in taxes is that enough savings to justify the extra paperwork etc. The other consideration is if you default on the payment (that means you stop paying yourself back), the outstanding loan balance becomes a taxable distribution plus the 10% penalty.

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