Example Scenario: Repaying after one year using a 401(k) loan. Still with employer. Lendtable Team September 13, 2023 22:57 Updated Assumptions: 100% match rate Up to 5% of salary $48,000 annual salary 20% tax rate 24 pay-periods/year (bi-weekly) Pre-tax contributions Kate just started a new job, and her 401(k) account balance is $0. Luckily, her employer offers an incredible 100% match on her contributions, up to 5% of her salary or the IRS limit of $22,500. Kate wants to seize this opportunity, but she also has a goal to save for a car this year. Here's how Lendtable can help Katie continue earning her employer match while she saves for a car: Securing the full 401(k) employer match: Kate signs up for a Lendtable line of credit to make the most of her employer's generous match. With Lendtable, she won't miss out on her employer's contributions, even while saving for her car. Using the line of credit to replace contributions: Kate contributes 5% of her salary. This equals $100 every pay period, totaling to $2,400 over the year. Her employer matches her contributions and contributes $100 every pay period, providing an additional an additional $2,400 to her 401(k). By contributing $100 every pay period on a pre-tax basis to her 401(k), Katie is effectively missing out on $80 in her pocket (due to taxes). To replace this lost income, Katie draws down her line of credit with Lendtable and reimburses herself $80 per pay period. She can set aside the $80 towards her car or other immediate expenses while continuing to earn her employer match. A $10 monthly fee is deducted from one of her reimbursements per month to use Lendtable's service. Year-End Balance: After 12 months, Kate's 401(k) balance reaches $4,800 (pre-tax) — $2,400 from her own contributions and $2,400 from her employer's matching contributions. Repayment of Lendtable Balance: Kate decides to discontinue using Lendtable, and her balance becomes due, totaling $2,304 — $1,920 from the 401(k) line of credit that was drawn from each pay period. Plus $384 which is equal to 20% of the employer match earned using the line of credit. To settle her Lendtable balance, she chooses to take a 401(k) loan from her account using Lendtable's “Pay with 401(k)” feature, enabling her to borrow up from her retirement account. The 401(k) loan amount is $2,304, equal to her total Lendtable balance. 401(k) Loan Repayment: Over the next 5 years, Kate is responsible for repaying the 401(k) loan, making payments of $24.50 per paycheck (assuming 10% interest). During this period, she will pay a total of $632 in interest on the loan. Kate is happy to take a 401(k) loan, realizing her principal and interest all go towards rebuilding the 401(k) funds she previously used to repay Lendtable. Net Profit: After one year of using Lendtable, Kate enjoys a net profit of $2,376.00 remaining in her 401(k) account. (Total 401(k) account balance) - (Lendtable balance due) - (Monthly fees) With Lendtable's support, Kate was able to use her line of credit to help save and pay for a new car as well as secure her employer match. Ready to achieve your financial goals with Lendtable? Sign up today! Related articles Example Scenario: Repaying after one year using a 401(k) withdrawal. Left employer. When will I receive deposits from the 401(k) Line of Credit? How do I pay my 401(k) Lendtable balance? Can I receive my money in a lump sum deposit up front? How does Lendtable work? Comments 0 comments Please sign in to leave a comment.