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RayJayco

Tampa

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Joined: 08/26/2009

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Posted: 03/11/20 06:18am Link  |  Quote  |  Print  |  Notify Moderator

Crowe wrote:

PS - loan payments on your residence aren't pre tax dollars

I know. Loan payments on the 401(k) note are though.


Not sure about this at all... Unless you paid taxes on the 401k loan (which you shouldn't have that I know of) paying the loan back is not tax deductible as the federal government is not going to allow you to have the same money tax free twice... IE, tax deductible when contributed and tax deductible when paying back. Honestly, you probably need to talk with a fiduciary (financial consultant that will work in YOUR best interest)

I have lost an incredible amount in the last 2 weeks. It is no loss unless I withdraw as the market should bounce back after this crown virus thing.

"Increasing" your "contributions" to a 401k would probably be a good thing as the price of shares are low. Paying the mortgage, if you can apply the money to "principal" would be a good thing to cut out long term interest considerably, of course depending upon the amount... I am not sure how your mortgage is structured and whether that is permitted though...

Again, see a fiduciary...


Inquiring minds want to know...

Crowe

Merrimack, NH

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Joined: 01/29/2002

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Posted: 03/11/20 07:41am Link  |  Quote  |  Print  |  Notify Moderator

Not sure about this at all... Unless you paid taxes on the 401k loan (which you shouldn't have that I know of) paying the loan back is not tax deductible as the federal government is not going to allow you to have the same money tax free twice...

Rephrase: The dollars used to pay off the loan from payroll deduction are pre-tax.

if you can apply the money to "principal" would be a good thing to cut out long term interest considerably, of course depending upon the amount... I am not sure how your mortgage is structured and whether that is permitted though...


Yes, we can. I don't know who in their right mind would take out any note with a prepayment penalty.

Even with paying the loan off there is still a large amount going towards 401(k) savings. We are leaning towards putting the money towards principal at this point as we are still saving at a good clip and we would like to face retirement mortgage-free. Still open to thoughts and ideas, which was the intent of this post, to get my brain thinking.


I may not have gone where I intended to go, but I think I have ended up where I needed to be Douglas Adams

RV-less for now but our spirits are still on the open road.

PA12DRVR

Back in God's Country

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Joined: 09/17/2003

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Posted: 03/11/20 10:49am Link  |  Quote  |  Print  |  Notify Moderator

"...we would like to face retirement mortgage-free."

This is not insignificant, (somewhat) notwithstanding what the numbers say.

To paraphrase the old commercial:
- $$ invested in 401(k)...xx% return
- Money invested to reduce mortgage...xx% return
- Mortgage free entering retirement, priceless.

We were able to pay off our primary residence which was perhaps arguably not the best use of the money and we paid off a rental property, even more likely not the best use of the money....but now we simply don't worry about any capital asset payments, we have the "downsize if one of us dies" house (what is now the rental property), and any current income beyond the grocery bills can be either used for investments (and as of today, we're throwing quite a bit at the market) or for mad money. It's a good feeling.


CRL
My RV is a 1946 PA-12
Back in the GWN

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