Using 401k loans to max tax advantaged accounts early in career

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Walkure
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Using 401k loans to max tax advantaged accounts early in career

Post by Walkure » Fri Sep 14, 2018 11:03 am

So I just had an idea and want to float it so you all can poke holes in it before I get carried away implementing something that comes back to bite me.

Say I have a 401k that allows loans, and I am not currently maxing contributions but expect income to increase over the next few years such that I will be maxing out in the foreseeable future. The issue is that in these early lower earning years, once they're gone I can never get that undermaxed "space" back. Would it be advisable to instead "contribute" to the max and then borrow it right back, with the plan of repaying + maxing in higher earning years to essentially claim the space now and pay later. In the future, if that expected income didn't materialize I could just back off on contributions while repaying and still end up no worse off than I would if I were to continue undercontributing now. One could say that I'm losing out on the time in the market with the loan, but if that was money I wouldn't otherwise have put in, I don't see it making a difference.

baseball2horse
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by baseball2horse » Fri Sep 14, 2018 11:10 am

So two big issues that I see.

1). I believe most 401k loans charge interest, so you would have to weigh the potential tax savings verse the interest rate.

2). The much larger concern would be you losing your job before any income increases. Most 401k loans have to be paid back within a very short time frame after leaving this job. This could result in you being unemployed without any source of income and owing a large sum. This is not a situation I would want to put myself in for some potential tax savings

Walkure
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Walkure » Fri Sep 14, 2018 11:36 am

baseball2horse wrote:
Fri Sep 14, 2018 11:10 am
So two big issues that I see.

1). I believe most 401k loans charge interest, so you would have to weigh the potential tax savings verse the interest rate.

2). The much larger concern would be you losing your job before any income increases. Most 401k loans have to be paid back within a very short time frame after leaving this job. This could result in you being unemployed without any source of income and owing a large sum. This is not a situation I would want to put myself in for some potential tax savings
My understanding is that the interest is paid to the account, so I don't see that as an "cost" drag from a theoretical standpoint (although it's obviously a real cash flow issue on the repayment side).

Number two is the only obvious negative scenario to my mind.

sailaway
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by sailaway » Fri Sep 14, 2018 12:19 pm

It seems like an unnecessarily complicated way to increase your risk.

-Have you verified that your plan allows you to make contributions while you have an outstanding loan?
-Does your plan charge an administration fee for the loan?
-Are you sure that you don't have to start making payments immediately, ie you can't just wait for a raise to start repayments?

Why not just split the difference? Increase your current contributions by the amount that your repayment would be.

chevca
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by chevca » Fri Sep 14, 2018 1:17 pm

How much are we talking here... how much in the 401k... how far off from maxing the low earning years would you be? Many plans have limits on how much you can borrow, like 50% of the total balance. You would probably have to start paying back the loan immediately. If you can't afford to max it out now, how would you afford to max it out plus pay back the loan?

It sounds like a bad idea to me. Just contribute what you can now and increase contributions as your pay goes up.

Walkure
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Walkure » Fri Sep 14, 2018 1:28 pm

sailaway wrote:
Fri Sep 14, 2018 12:19 pm
It seems like an unnecessarily complicated way to increase your risk.
That describes most of my ideas very well! :annoyed
-Have you verified that your plan allows you to make contributions while you have an outstanding loan?
-Does your plan charge an administration fee for the loan?
-Are you sure that you don't have to start making payments immediately, ie you can't just wait for a raise to start repayments?

Why not just split the difference? Increase your current contributions by the amount that your repayment would be.
I think there is a small fixed administrative fee. Repayments would begin immediately, can continue making contributions while loan is outstanding. All good points you raise.

mortfree
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by mortfree » Fri Sep 14, 2018 1:32 pm

you'll also pay taxes on your 401k loan money twice...

while you are repaying the loan, you get taxed since that amount is not taken out of your paycheck pre-tax.

when you go to redeem your 401k in the future, you will be taxed on those dollars, again.

CRTR
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by CRTR » Fri Sep 14, 2018 1:35 pm

Walkure wrote:
Fri Sep 14, 2018 11:36 am
baseball2horse wrote:
Fri Sep 14, 2018 11:10 am
So two big issues that I see.

1). I believe most 401k loans charge interest, so you would have to weigh the potential tax savings verse the interest rate.

2). The much larger concern would be you losing your job before any income increases. Most 401k loans have to be paid back within a very short time frame after leaving this job. This could result in you being unemployed without any source of income and owing a large sum. This is not a situation I would want to put myself in for some potential tax savings
My understanding is that the interest is paid to the account, so I don't see that as an "cost" drag from a theoretical standpoint (although it's obviously a real cash flow issue on the repayment side).

Number two is the only obvious negative scenario to my mind.
Couple other thoughts . . . .

The interest is paid with post-tax dollars and goes into a qualified account. For example, a $50,000 loan carrying a 6 percent interest rate will generate $3000 annually in interest that will be taxed at your marginal income tax rate. The $3000 will be taxed AGAIN when withdrawn in retirement.

Finally, a lot of plan documents don't let you contribute until you have paid off your loan. So, in the future, when you want to start contributing, you'll have to have enough to cover the ENTIRE total loan balance plus your desired contribution that year.

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 1:40 pm

mortfree wrote:
Fri Sep 14, 2018 1:32 pm
you'll also pay taxes on your 401k loan money twice...

while you are repaying the loan, you get taxed since that amount is not taken out of your paycheck pre-tax.

when you go to redeem your 401k in the future, you will be taxed on those dollars, again.
This appears to be incorrect. The actual loan amount is not taxed twice, just the interest is. To convince yourself, imagine taking out the loan and immediately (or later) paying it back with the same funds - no double taxation.

DesertMan
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by DesertMan » Fri Sep 14, 2018 1:45 pm

I've actually been considering doing something similar--taking a 457 plan loan from an employer that lets me keep the loan outstanding after separation, getting a better job (with no 457) after investing the loan proceeds in a taxable account, and then paying back the loan out of cash flow in order to effectively continue 457 contributions after separation. As others have pointed out, you have to take into consideration all the taxation that will go on: the loan payments are made with after-tax money, and then you're taxed again on your money when you take your distributions from the plan. So it's like contributing to a non-deductible IRA. The benefit you get is tax deferral on the extra money you've put in the plan. Whether that benefit is worth all the extra taxes flying around depends on your marginal rate while you're paying back the loan (that determines the tax on money in + tax on dividends and capital gains while the loan proceeds are invested) and when you're taking distributions from the plan (same for money out).

This MIGHT make sense if you're in a low bracket and expect the same at retirement, or if the plan in question is a 457 or other extra-advantaged plan that you're trying to maximize. But you also have to factor in the fees charged by the plan for the loan, which depends on your plan. So at the very least you have to know what you're getting into. And you have to commit to invest the loan proceeds as if it had stayed in the plan, because to do otherwise incurs opportunity cost--you're losing the increase on value that the money would have had within the plan.

Does that sound about right?

mortfree
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by mortfree » Fri Sep 14, 2018 1:53 pm

Wolkenspiel wrote:
Fri Sep 14, 2018 1:40 pm
mortfree wrote:
Fri Sep 14, 2018 1:32 pm
you'll also pay taxes on your 401k loan money twice...

while you are repaying the loan, you get taxed since that amount is not taken out of your paycheck pre-tax.

when you go to redeem your 401k in the future, you will be taxed on those dollars, again.
This appears to be incorrect. The actual loan amount is not taxed twice, just the interest is. To convince yourself, imagine taking out the loan and immediately (or later) paying it back with the same funds - no double taxation.
I'm probably wrong...

my thought was if my paycheck is $2000, and my loan payment is $500... then when I get my paycheck, my taxable gross income is $2000. IF I had contributed $500 to the 401k (not a loan), then my taxable income is $1500.

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 1:55 pm

CRTR wrote:
Fri Sep 14, 2018 1:35 pm

Couple other thoughts . . . .

The interest is paid with post-tax dollars and goes into a qualified account. For example, a $50,000 loan carrying a 6 percent interest rate will generate $3000 annually in interest that will be taxed at your marginal income tax rate. The $3000 will be taxed AGAIN when withdrawn in retirement.
That's true, but with many conventional loans, 100% of the interest is gone for good (or 100% * (1-marginal tax rate)).

OP should also consider carefully the prospects of remaining in the current position and the timing of the end of the "low earning years". Given that the 401k loan would have a max 60 month term and a $50k max amount, this seems like a complicated scheme for a gain that would be marginal at best, if and when the high earning years arrive (and if the transition is connected to a change in employer, this is going to be even more of a mess).

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 1:59 pm

mortfree wrote:
Fri Sep 14, 2018 1:53 pm
Wolkenspiel wrote:
Fri Sep 14, 2018 1:40 pm
mortfree wrote:
Fri Sep 14, 2018 1:32 pm
you'll also pay taxes on your 401k loan money twice...

while you are repaying the loan, you get taxed since that amount is not taken out of your paycheck pre-tax.

when you go to redeem your 401k in the future, you will be taxed on those dollars, again.
This appears to be incorrect. The actual loan amount is not taxed twice, just the interest is. To convince yourself, imagine taking out the loan and immediately (or later) paying it back with the same funds - no double taxation.
I'm probably wrong...

my thought was if my paycheck is $2000, and my loan payment is $500... then when I get my paycheck, my taxable gross income is $2000. IF I had contributed $500 to the 401k (not a loan), then my taxable income is $1500.
I believe the OP is planning to keep up his current contribution level, make the repayment from the loan proceeds and top up to the maximum allowed contribution from the loan proceeds as well.

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dm200
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by dm200 » Fri Sep 14, 2018 2:02 pm

Walkure wrote:
Fri Sep 14, 2018 11:03 am
So I just had an idea and want to float it so you all can poke holes in it before I get carried away implementing something that comes back to bite me.

Say I have a 401k that allows loans, and I am not currently maxing contributions but expect income to increase over the next few years such that I will be maxing out in the foreseeable future. The issue is that in these early lower earning years, once they're gone I can never get that undermaxed "space" back. Would it be advisable to instead "contribute" to the max and then borrow it right back, with the plan of repaying + maxing in higher earning years to essentially claim the space now and pay later. In the future, if that expected income didn't materialize I could just back off on contributions while repaying and still end up no worse off than I would if I were to continue undercontributing now. One could say that I'm losing out on the time in the market with the loan, but if that was money I wouldn't otherwise have put in, I don't see it making a difference.
A 401k "loan" is not really a "loan" at all. When you take out a 401k "loan", the amount of the "loan" comes from the sale/liquidation of your 401k investments.

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 2:08 pm

DesertMan wrote:
Fri Sep 14, 2018 1:45 pm
I've actually been considering doing something similar--taking a 457 plan loan from an employer that lets me keep the loan outstanding after separation, getting a better job (with no 457) after investing the loan proceeds in a taxable account, and then paying back the loan out of cash flow in order to effectively continue 457 contributions after separation. As others have pointed out, you have to take into consideration all the taxation that will go on: the loan payments are made with after-tax money, and then you're taxed again on your money when you take your distributions from the plan.
The OP's scheme only makes sense if the repayments are made with the (untaxed) loan proceeds until the high-earning years arrive, as otherwise he wouldn't be able to contribute more than he already is.

But in any case, there's no double taxation. If you wish, you can look at it as the never-taxed loan proceeds canceling out the double-taxed repayment, so in summary, everything but the interest payment is only taxed once.

CRTR
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by CRTR » Fri Sep 14, 2018 2:41 pm

Wolkenspiel wrote:
Fri Sep 14, 2018 1:55 pm
CRTR wrote:
Fri Sep 14, 2018 1:35 pm

Couple other thoughts . . . .

The interest is paid with post-tax dollars and goes into a qualified account. For example, a $50,000 loan carrying a 6 percent interest rate will generate $3000 annually in interest that will be taxed at your marginal income tax rate. The $3000 will be taxed AGAIN when withdrawn in retirement.
That's true, but with many conventional loans, 100% of the interest is gone for good (or 100% * (1-marginal tax rate)).

OP should also consider carefully the prospects of remaining in the current position and the timing of the end of the "low earning years". Given that the 401k loan would have a max 60 month term and a $50k max amount, this seems like a complicated scheme for a gain that would be marginal at best, if and when the high earning years arrive (and if the transition is connected to a change in employer, this is going to be even more of a mess).
Sorry, I musts have missed something here? who said anything about conventional loans? Don't think that option was ever on the table for the OP.

My understanding is that the OP is going to spend the $$ because he needs it now and play catch-up in later years when his salary increases . . . .or maybe I'm completely confused . . .

maybe I shouldn't answer these things on my phone. . . . :)

DesertMan
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by DesertMan » Fri Sep 14, 2018 2:43 pm

Wolkenspiel wrote:
Fri Sep 14, 2018 2:08 pm
DesertMan wrote:
Fri Sep 14, 2018 1:45 pm
As others have pointed out, you have to take into consideration all the taxation that will go on: the loan payments are made with after-tax money, and then you're taxed again on your money when you take your distributions from the plan.
But in any case, there's no double taxation. If you wish, you can look at it as the never-taxed loan proceeds canceling out the double-taxed repayment, so in summary, everything but the interest payment is only taxed once.
Thanks. But can you help me understand why there is no double taxation on the loan principal? Of course the loan proceeds are never taxed, but then you have to make principal and interest payments. And if the source of the repayment is your wages or net self employment income, the whole payment is after tax money on which you paid ordinary income tax. If it’s repaid by selling taxable investments (i.e. the proceeds of the loan itself), there is capital gains tax unless you’re in a low bracket, or the same ordinary income tax if it hasn’t been a year yet. That might be one way around the double taxation, at least after year one. Was that what you were thinking?

Another way around it could be to take the loan proceeds from Employer A’s plan, separate from Employer A after making sure you don’t have to repay in full on separation, then put the loan proceeds into your Traditional IRA, Employer B’s 401k, and/or a SEP/Solo 401k/other deterred small business plan. Then, the loan payments are still after-tax but were offset by the deduction that you got by stuffing the loan proceeds into a retirement plan. And if you opt for the retirement-stuffing move and will be in a lower tax bracket as you pay off the loan, you may benefit because you got your deduction now versus later when you have less tax to pay. What do you think?

EDIT: Oh, I get it now. Capital gains tax would not be owed on the principal but only on the gain/loss. So if it’s stuffed into a retirement plan, you’re getting a deduction on money that you didn’t pay tax on— that turns even the loan payments into before-tax money (a free lunch so long as the costs of the loan don’t exceed the value of the deduction.) Or is the math wrong?

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 3:13 pm

Oops, double post.
Last edited by Wolkenspiel on Fri Sep 14, 2018 3:31 pm, edited 1 time in total.

Wolkenspiel
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Wolkenspiel » Fri Sep 14, 2018 3:30 pm

Wolkenspiel wrote:
Fri Sep 14, 2018 3:13 pm
DesertMan wrote:
Fri Sep 14, 2018 2:43 pm
Wolkenspiel wrote:
Fri Sep 14, 2018 2:08 pm
DesertMan wrote:
Fri Sep 14, 2018 1:45 pm
As others have pointed out, you have to take into consideration all the taxation that will go on: the loan payments are made with after-tax money, and then you're taxed again on your money when you take your distributions from the plan.
But in any case, there's no double taxation. If you wish, you can look at it as the never-taxed loan proceeds canceling out the double-taxed repayment, so in summary, everything but the interest payment is only taxed once.
Thanks. But can you help me understand why there is no double taxation on the loan principal? Of course the loan proceeds are never taxed, but then you have to make principal and interest payments. And if the source of the repayment is your wages or net self employment income, the whole payment is after tax money on which you paid ordinary income tax. If it’s repaid by selling taxable investments (i.e. the proceeds of the loan itself), there is capital gains tax unless you’re in a low bracket, or the same ordinary income tax if it hasn’t been a year yet. That might be one way around the double taxation, at least after year one. Was that what you were thinking?

Another way around it could be to take the loan proceeds from Employer A’s plan, separate from Employer A after making sure you don’t have to repay in full on separation, then put the loan proceeds into your Traditional IRA, Employer B’s 401k, and/or a SEP/Solo 401k/other deterred small business plan. Then, the loan payments are still after-tax but were offset by the deduction that you got by stuffing the loan proceeds into a retirement plan. And if you opt for the retirement-stuffing move and will be in a lower tax bracket as you pay off the loan, you may benefit because you got your deduction now versus later when you have less tax to pay. What do you think?

EDIT: Oh, I get it now. Capital gains tax would not be owed on the principal but only on the gain/loss. So if it’s stuffed into a retirement plan, you’re getting a deduction on money that you didn’t pay tax on— that turns even the loan payments into before-tax money (a free lunch so long as the costs of the loan don’t exceed the value of the deduction.) Or is the math wrong?
Ignoring capital gains taxes on invested loan proceeds, changing tax brackets, sequence of return, loan fees and double-taxation of interest etc etc, the basic situation is very simple: if you never take out a 401k loan or if you take a loan and pay it back, the taxes paid in retirement are the same, assuming the same balance. So no extra taxation there. For the after-tax money used to pay back the loan, there are also no additional taxes due when making the loan payments. No extra taxes paid anywhere, hence also no double taxation. What makes it tax neutral? The fact that you get the same amount of money out with the loan (never paying tax on that) as you then put back in with after-tax money.

I still think the easiest way to see that is to remove the after-tax money from the equation. Take out a 401k loan and pay it back the next day from the loan proceeds themselves. It's clear that in this case there is no double-taxation anywhere. "Keeping" the loan proceeds and paying the loan back from after-tax money obviously has the same result.

DesertMan
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by DesertMan » Fri Sep 14, 2018 3:53 pm

Wolkenspiel wrote:
Fri Sep 14, 2018 3:30 pm
Wolkenspiel wrote:
Fri Sep 14, 2018 3:13 pm
DesertMan wrote:
Fri Sep 14, 2018 2:43 pm
Wolkenspiel wrote:
Fri Sep 14, 2018 2:08 pm
DesertMan wrote:
Fri Sep 14, 2018 1:45 pm
As others have pointed out, you have to take into consideration all the taxation that will go on: the loan payments are made with after-tax money, and then you're taxed again on your money when you take your distributions from the plan.
But in any case, there's no double taxation. If you wish, you can look at it as the never-taxed loan proceeds canceling out the double-taxed repayment, so in summary, everything but the interest payment is only taxed once.
Thanks. But can you help me understand why there is no double taxation on the loan principal? Of course the loan proceeds are never taxed, but then you have to make principal and interest payments. And if the source of the repayment is your wages or net self employment income, the whole payment is after tax money on which you paid ordinary income tax. If it’s repaid by selling taxable investments (i.e. the proceeds of the loan itself), there is capital gains tax unless you’re in a low bracket, or the same ordinary income tax if it hasn’t been a year yet. That might be one way around the double taxation, at least after year one. Was that what you were thinking?

Another way around it could be to take the loan proceeds from Employer A’s plan, separate from Employer A after making sure you don’t have to repay in full on separation, then put the loan proceeds into your Traditional IRA, Employer B’s 401k, and/or a SEP/Solo 401k/other deterred small business plan. Then, the loan payments are still after-tax but were offset by the deduction that you got by stuffing the loan proceeds into a retirement plan. And if you opt for the retirement-stuffing move and will be in a lower tax bracket as you pay off the loan, you may benefit because you got your deduction now versus later when you have less tax to pay. What do you think?

EDIT: Oh, I get it now. Capital gains tax would not be owed on the principal but only on the gain/loss. So if it’s stuffed into a retirement plan, you’re getting a deduction on money that you didn’t pay tax on— that turns even the loan payments into before-tax money (a free lunch so long as the costs of the loan don’t exceed the value of the deduction.) Or is the math wrong?
Ignoring capital gains taxes on invested loan proceeds, changing tax brackets, sequence of return, loan fees and double-taxation of interest etc etc, the basic situation is very simple: if you never take out a 401k loan or if you take a loan and pay it back, the taxes paid in retirement are the same, assuming the same balance. So no extra taxation there. For the after-tax money used to pay back the loan, there are also no additional taxes due when making the loan payments. No extra taxes paid anywhere, hence also no double taxation. What makes it tax neutral? The fact that you get the same amount of money out with the loan (never paying tax on that) as you then put back in with after-tax money.

I still think the easiest way to see that is to remove the after-tax money from the equation. Take out a 401k loan and pay it back the next day from the loan proceeds themselves. It's clear that in this case there is no double-taxation anywhere. "Keeping" the loan proceeds and paying the loan back from after-tax money obviously has the same result.
Got it. So then if the loan funds are stuffed into another deferred plan, it sounds like there could be a potential tax benefit if the additional deduction is more than the loan fees. Do you think so? If so, there could be a benefit to taking even an in-service loan that is put into an IRA, again assuming fees aren’t an issue.

dknightd
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by dknightd » Fri Sep 14, 2018 3:59 pm

Interesting concept. Too risky for my taste, but it might work out well for you.

tesuzuki2002
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by tesuzuki2002 » Fri Sep 14, 2018 4:32 pm

Walkure wrote:
Fri Sep 14, 2018 11:03 am
So I just had an idea and want to float it so you all can poke holes in it before I get carried away implementing something that comes back to bite me.

Say I have a 401k that allows loans, and I am not currently maxing contributions but expect income to increase over the next few years such that I will be maxing out in the foreseeable future. The issue is that in these early lower earning years, once they're gone I can never get that undermaxed "space" back. Would it be advisable to instead "contribute" to the max and then borrow it right back, with the plan of repaying + maxing in higher earning years to essentially claim the space now and pay later. In the future, if that expected income didn't materialize I could just back off on contributions while repaying and still end up no worse off than I would if I were to continue undercontributing now. One could say that I'm losing out on the time in the market with the loan, but if that was money I wouldn't otherwise have put in, I don't see it making a difference.
We're only talking about $18,500 here total... can you not adjust your budget to get to cash flowing the max amount?

Skierajs
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Skierajs » Fri Sep 14, 2018 4:50 pm

I actually thought of doing this earlier in my career and didn't. Now I wish I had done it. It is a little bit risky, but it also may create a good "forced savings" situation since the loan payment will also be taken from your paycheck. The main risks I see is a forced early withdrawal of the remaining loan principle if things don't go as planned and you default on the loan at some point, and personal discipline not to use the loan proceeds for anything else but to support the higher contribution plus loan payment.

I used a 401k loan for a small home renovation immediately following purchase (to bridge to a HELOC) and it was no problem. Depending on your state and plan you may be able to just keep paying back the loan even if you quit your job (that was the case with my 401k through Fidelity).

Be mindful that most plans only allow one loan at a time so you will have to plan carefully.

bberris
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by bberris » Fri Sep 14, 2018 9:32 pm

sailaway wrote:
Fri Sep 14, 2018 12:19 pm
It seems like an unnecessarily complicated way to increase your risk.

...
Risk is not increased. The 401k loan does not generate leverage, because it is not really a loan; it's a withdrawal.
On the other hand, you are not really increasing your 401k balance. When you take out the loan and make contributions equal to the loan it's a wash. Your income would have to increase dramatically to both pay back the "loan" and max out future contributions. But if that's the case, I think the approach is reasonable.

Nate79
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Re: Using 401k loans to max tax advantaged accounts early in career

Post by Nate79 » Fri Sep 14, 2018 10:41 pm

If you withdraw the money it is not invested but instead pay back as interested like fixed income. So you could consider it like fixed income but if you are early in your career this will mean way too high fixed income allocation. Seems a waste of time to me.

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