Tax considerations Lendtable Team July 12, 2023 00:14 Updated *Please note that this is a general support article, meant to be informative. Lendtable does not provide financial, legal, tax, or investment advice. Always consider your situation and consult with your own advisor for tailored advice. When using Lendtable, it's important to understand how it might affect your taxes. Here's a general breakdown of the tax implications of 401(k) loans, 401(k) withdrawals, rollovers, and how Lendtable sends deposits on an after-tax basis. Remember, this is meant to be general and informative and is not specific to your own situation. 401(k) Loans A 401(k) loan allows you to borrow money from your own 401(k) account. This loan isn't considered taxable income as long as it's repaid within the specified time frame, typically five years. If you don't repay the loan as agreed, it's considered a distribution and becomes subject to taxes and potentially early withdrawal penalties. Always review the specific terms of your 401k plan documents. 401(k) Withdrawals When you withdraw money from your 401(k) before reaching the age of 59.5, it's typically considered an early withdrawal and is subject to your normal income tax rate as well as a 10% early withdrawal penalty. However, there are exceptions to this rule for certain situations, such as a first-time home purchase, certain medical expenses, or financial hardship. Always review the specific terms of your 401(k) plan documents. Rollovers A rollover involves moving funds from one retirement account to another, such as from a 401(k) to an IRA. If you do a direct rollover, where the money is sent directly from one account to another, there are no immediate tax implications. However, if you do an indirect rollover, where the money is sent to you and you deposit it into the new account, you have 60 days to complete the process to avoid taxes and penalties. If you were to use a portion of the withdrawn money that is not rolled into another retirement account, you may owe taxes and penalties as if the portion was a typical withdrawal. Lendtable Deposits Deposits are sent directly to your bank account and are calculated on an after-tax basis. Deposits are not considered taxable income because a line of credit is a loan-type product. Deposits are lent and will need to be repaid, so you won't owe additional income tax. Calculating Deposits The amount Lendtable disburses to you is calculated based on your 401(k) or ESPP contribution and is provided on an after-tax basis. This calculation is designed to ensure that the deposits act as replacements for the income you would have received had you not made any contribution to your 401(k) or ESPP. Related articles How does Lendtable work? Rules when using Lendtable Do I need to pay back the money that I receive from Lendtable? How much does it cost to use the 401(k) Line of Credit? What is a 401(k) match and why is it so important? Comments 0 comments Please sign in to leave a comment.