Borrowers Get More Time to Repay 401(k) Loans
If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
Question: I understand that the new tax law changed the deadline for repaying a 401(k) loan if you leave your job. How much time do borrowers now have? - S.C., Omaha
Answer: The new—and extended—deadline to repay the loan and avoid taxes and penalties is the due date of your tax return for the year you leave your job. Before, you had to repay the loan within 60 days of leaving your job to avoid taxes on the money, plus a 10% penalty if you left before age 55. If you file an extension for your tax return, you’ll have until October 15 of the year after you leave your job to repay the loan without penalties or taxes.