Taking home loans from multiple 401k/403b accounts

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joelmiller
Posts: 5
Joined: Sat Sep 28, 2013 12:26 pm

Taking home loans from multiple 401k/403b accounts

Post by joelmiller » Mon Jan 22, 2018 7:23 pm

I have a 403b from a former employer and a 401k from a current employer. Both accounts will allow me to take out a loan for a down payment.

The IRS places a 50K limit on loans (and a 50% max), but everywhere I see that, it is a limit placed on the plan rather than the employee.

I want to know if I am able to take out a loan of, say, 40K from one and 40K from another, so below 50K from each plan, but over 50K in total.

(I know there are lots of good reasons not to do this, but that's not my question. For those who really care, it would be good to do this because by doing so I can make a larger down payment and thus reduce my interest rate on the mortgage, and in the market I'm buying in I expect several competing offers so making a larger down payment helps convince the seller I'm going to qualify for a loan).

The same question was asked (but not answered) here: viewtopic.php?t=191994

bloom2708
Posts: 3944
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Taking home loans from multiple 401k/403b accounts

Post by bloom2708 » Tue Jan 23, 2018 12:17 pm

Seems like a really bad idea.

How do you pay back the 401k loans from a former employer? With your current employer, you take the loan payment out of your check.

I do not think you can afford the house if you need to do this.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

joelmiller
Posts: 5
Joined: Sat Sep 28, 2013 12:26 pm

Re: Taking home loans from multiple 401k/403b accounts

Post by joelmiller » Tue Jan 23, 2018 12:25 pm

One pays it back by direct debit from a bank account.

I do not need to do this to afford the house, but if I do it, it would lower the interest rate I pay on the mortgage.

My question is whether it is allowed or not.

Spendy
Posts: 20
Joined: Mon Feb 23, 2015 11:19 am

Re: Taking home loans from multiple 401k/403b accounts

Post by Spendy » Tue Jan 23, 2018 12:27 pm

Call the plans customer service to find out the details. A seller may not give a second thought to higher deposit , higher offer yes.

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