Tsehai writes:
Hi,
My husband got laidoff and now we owe $10,000 IRS tax due to money we borrowed aginst his 401K prior to his layoff. If he was still working the money we borrowed would have continue to be paid from his pay check and the borrowed money would not have been added to our 2008 earning. Due to the unfortunate situation, now, we are subjected to 10% penalty for early withdrowal and state and federal taxes. Is there any thing we can do to not pay the 10%penalty for early withdrowal and federal and sate taxes?
Just curious,
Thanks!
My husband got laidoff and now we owe $10,000 IRS tax due to money we borrowed aginst his 401K prior to his layoff. If he was still working the money we borrowed would have continue to be paid from his pay check and the borrowed money would not have been added to our 2008 earning. Due to the unfortunate situation, now, we are subjected to 10% penalty for early withdrowal and state and federal taxes. Is there any thing we can do to not pay the 10%penalty for early withdrowal and federal and sate taxes?
Just curious,
Thanks!
My reply:
Read the terms of the loan. Most loans are structured such that you can continue to make payments on it after you get laid off, just not through payroll withdrawal. If you continue to make the payments, then there shouldn't be a problem.
Best wishes,
Gina
http://GLGcpa.com
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