401(k) Leave Repayment
Compare two repayment paths.
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Plans may permit 401(k) loan pauses during nonmilitary leave.
Compare repayment paths
Fictional compliant non-home-purchase loan after approved leave: $4,800 includes accrued interest, with 12 months to its five-year deadline. Assume 1% monthly interest, first payment one month later, no other charges and original $300 installments.
With plan approval, 12 equal payments are about $426.47; or twelve $300 payments plus $1,604.01 with the twelfth. Final amounts rounded.
Confirm the plan terms
Treasury’s rule permits at most one year’s suspension during bona fide leave with no employer pay or pay after employment-tax withholding below required installments. Accrued interest remains owed. Later installments cannot be below the original amount; the ordinary tax maximum is five years from borrowing. Plan terms control. Military rules differ. Ask the administrator.
Canceled Debt: Interest in Box 3
Separate interest from principal.