What is Lendtable's "Pay With 401(k)" feature? Lendtable Team August 14, 2023 23:01 Updated For many customers, it may be easier to pay their balance due using the 401(k) funds Lendtable has helped them earn rather than paying out of pocket. To provide our customers with a quick and easy repayment process, we now offer automated 401(k) withdrawals and loans to make paying your balance even easier! How does Pay with 401(k) work? Using a secure portal, we can help you trigger a 401(k) withdrawal and authorize Lendtable to charge your linked checking account once the 401(k) funds have been deposited. What’s needed to use Pay with 401(k): Your 401(k) provider's login information You'll log into your 401(k) provider in a secure window to grant Lendtable access. Access to your phone Your 401(k) provider may send a security code to your phone. You'll need to enter this to allow access to Lendtable. Once the authorization is confirmed, the following steps will happen automatically: We will initiate a withdrawal including your estimated taxes. Note: if you are still employed with the same employer, our system will automatically initiate a 401(k) loan to pay your balance. Skip to the 401(k) Loan section for more information on how this works. The funds are deposited directly into the bank account connected to your 401(k). Lendtable will initiate an ACH payment of your Lendtable balance. Why should I use Lendtable's Pay with 401(k) service? Our withdrawal service is a great option for customers who want to avoid navigating the withdrawal process themselves, or who aren't as familiar with 401(k) account intricacies. By using this service, our customers don't need to take the time to navigate their 401(k) provider's system and attempt to make a withdraw themselves. We created this feature to help simplify 401(k) withdrawals and help customers feel confident and unburdened in paying their balance. How do I know if I’m eligible to pay by 401(k) loan or withdrawal? If you are still employed with the same employer as when you began using Lendtable, we will automatically initiate a 401(k) loan in order to pay your balance. If you’ve left your employer, you’ll be eligible for a 401(k) withdrawal. Our system will determine eligibility when you are in the payment process. How does a 401(k) loan work? A 401(k) loan borrows from your own 401(k) balance. This means that you pay the funds directly back to your own account. Loans are generally issued for 60 months and payments are made directly from your payroll by your employer. There are some major perks to taking out 401(k) loans compared to withdrawals: No 10% withdrawal fee as long as your loan is paid back in full. You pay your loan back to your 401(k), increasing your own balance over the course of the loan. You do not need to pay income taxes on 401(k) loans as long as they are paid back in full. Once Lendtable initiates your 401(k) loan, the funds will be withdrawn from the checking account linked to your 401(k) after the loan is deposited. After that, your payroll withholdings will begin on the following paycheck. How does withdrawing from my 401(k) affect my taxes? When you make a withdrawal from your 401(k) account*¹, 20% is immediately withheld from the withdrawal to pay the mandatory minimum federal income tax owed. Lendtable will adjust this to meet your estimated income taxes based on your income and location. Our goal is to lessen the tax burden when you file taxes by getting as close as possible to your actual withholding amount. You may find that when you file your taxes, there is a slight discrepancy in which case you may owe or receive the difference between our estimated tax rate and your actual tax rate. Example: If you withdraw in 2023, you will be asked to pay your federal income tax for the amount withdrawn when filling your taxes in Spring of 2024. At this time, if you owe additional taxes, you'll be required to pay them. Similarly, if you over-paid, you will receive the over-paid funds back. What fees are associated with a 401(k) withdrawal? If you withdraw from your 401k account, you may also be required to pay a 10% penalty fee*² depending on your circumstances and 401(k) provider. This fee will be due at tax filing and will require that you complete an additional tax form. Lendtable does not compensate customers for this fee if they choose to repay their Lendtable balance with a 401(k) withdrawal. If you take a 401(k) withdrawal and incur a 10% early withdraw fee, you will be responsible for paying this fee at the time of filing your taxes in the following year. For example: If you make a withdrawal to pay your Lendtable balance in 2023, and incur a 10% penalty fee, you will be required to pay your 10% penalty fee when you file your 2023 taxes in Spring of 2024. *Please scroll to the end of the article for more information. Tax Forms You'll receive a Form 1099-R form from your 401(k) plan at the end of the year which you'll use to complete your taxes. Additionally, you'll need to complete IRS Form 5329 to report the withdrawal so that your 10% withdrawal penalty can be applied. Frequently Asked Questions: 1. How much money will Lendtable's service withdraw from my 401(k) account? Our service is only authorized to withdrawal the necessary amount to repay your Lendtable balance plus 20% for your federal income tax owed. For example: if your Lendtable balance is $1,000, we will then withdraw $1,200. $1,000 for your balance, and $200 (20%) for the estimated federal income tax owed. 2. ***How long does the withdrawal take?***Withdrawals can take 1-3 business days to complete depending on your 401(k) provider. If your bank account is not already linked to your Lendtable account, verification and withdrawals can take up to 10 business days to complete. 3*. What if I need to change my information?* If you run into any last-minute changes with your financial situation or you need assistance linking a different bank account, you'll be able to schedule a call with our team directly through your Lendtable account. 4. What if I need more help? Should you need any further assistance with Lendtable's automated withdrawal service, you can schedule a call with us directly for support. From there, we can help walk you through the process or lend a hand to ensure the process goes smoothly. **This support article is for informational purposes only. Tax situations may vary, please consult with a tax advisor if you have further questions regarding your finances.***³ Additional Information: ¹If you have a ROTH 401k account, you may only incur the 10% early withdraw penalty fee if your ROTH account is less than five years old**,** and if you are less than 59 1/2 years old. ²You may be required to pay a 10% penalty fee when you withdraw from your 401k account if you are less than 59 1/2 years old. ³Lendtable does not provide financial, legal, tax, or investment advice. Always consider your situation and consult with your own advisor. Related articles How do I pay my 401(k) Lendtable balance? Why is the amount of my deposit less than my 401(k) payroll contribution? How does Lendtable work? How does Lendtable work? When will I receive deposits from the 401(k) Line of Credit? 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