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401k loan alternative ?

Established Contributor

401k loan alternative ?

I'm working through an unpleasant tax situation, and need 10K for about a year (10 or 11 months should suffice) to stay above water.  My projections indicate finances back to good by Feb/Mar 2019, sooner if the numbers indicate that I can lower Tax Estimate payments without penalty.

 

The budget I used assumes (and includes) a 5-year loan from my 401K at 4% (with payments of ~190/mo until until I pay off the balance).

 

Already have a HELoan, so don't believe that a Home Equity line is an option (current LTV is 66%).

 

Any other possibilities I'm missing?

2019 Goal: 800+ across the board (my sole 30-day late drops in Q1 2019)
2018 Goals: garden, 750+ across the board, garden, put away 3 months' savings, garden



Experian is the canary in my coal mine.

EQ7637 INQ (4 CC, 2 mort, 1 auto)
EX7388 INQ (4 CC, 2 HELoan, 2 mort)
TU8056 INQ (4 CC, 2 mort)
6/24 < 5% AAoA TBD | AoYA 0m | AoOA 19y 2m
Take the myFICO Fitness Challenge [ Last INQ 11-May-2018 ]
Gardening 'til Q1 2019
Message 1 of 7
6 REPLIES
Established Contributor

Re: 401k loan alternative ?


@expatCanuck wrote:

I'm working through an unpleasant tax situation, and need 10K for about a year (10 or 11 months should suffice) to stay above water.  My projections indicate finances back to good by Feb/Mar 2019, sooner if the numbers indicate that I can lower Tax Estimate payments without penalty.

 

The budget I used assumes (and includes) a 5-year loan from my 401K at 4% (with payments of ~190/mo until until I pay off the balance).

 

Already have a HELoan, so don't believe that a Home Equity line is an option (current LTV is 66%).

 

Any other possibilities I'm missing?


Expat, what about a business CC with 0% APR? For example, the Amex Blue Business Plus has 0% intro APR for 15 months. Since it is a business card the credit lines can be higher. That should be enough time to get back on track and it’s a hidden trade line.


Message 2 of 7
Established Contributor

Re: 401k loan alternative ?


@shoegal wrote:

@expatCanuck wrote:

I'm working through an unpleasant tax situation, and need 10K for about a year (10 or 11 months should suffice) to stay above water.  My projections indicate finances back to good by Feb/Mar 2019, sooner if the numbers indicate that I can lower Tax Estimate payments without penalty.

 

The budget I used assumes (and includes) a 5-year loan from my 401K at 4% (with payments of ~190/mo until until I pay off the balance).

 

Already have a HELoan, so don't believe that a Home Equity line is an option (current LTV is 66%).

 

Any other possibilities I'm missing?


Expat, what about a business CC with 0% APR? For example, the Amex Blue Business Plus has 0% intro APR for 15 months. Since it is a business card the credit lines can be higher. That should be enough time to get back on track and it’s a hidden trade line.


Thanks, Shoegal.  Worth considering.  Thing is, I don't need credit -- I need cash (to pay tax installments).  Also, don't know if I'd qualify for a business card as I don't run a business -- I'm an employee.

2019 Goal: 800+ across the board (my sole 30-day late drops in Q1 2019)
2018 Goals: garden, 750+ across the board, garden, put away 3 months' savings, garden



Experian is the canary in my coal mine.

EQ7637 INQ (4 CC, 2 mort, 1 auto)
EX7388 INQ (4 CC, 2 HELoan, 2 mort)
TU8056 INQ (4 CC, 2 mort)
6/24 < 5% AAoA TBD | AoYA 0m | AoOA 19y 2m
Take the myFICO Fitness Challenge [ Last INQ 11-May-2018 ]
Gardening 'til Q1 2019
Message 3 of 7
Senior Contributor

Re: 401k loan alternative ?

When you say tax intallments and tax estimates it sounds like a business. 

 

You can use a card to pay tax installments, assuming you mean payments for an installment agreement.  via pay1040.com etc. There's just under a 2% fee IIRC.

 

Ah, maybe state taxes? I'm sure that depends. 

 

I got a PL from Marcus recently at 6.99% (I think). Super quick and painless. Yes, the interest is higher, but you wouldn't have to touch your 401k. Soft pull to start, then TU when proceeding. I got an offer with a much higher rate from SoFi, though I'm very happy with them for my student loan refi's. Others here have had success with them for PL's. Also a soft pull. 

 

ETA: Another option would be BT check if you have any available. You said things should lighten up in about a year, so it'd be a quick way to kick the can down the road. 

Entered the Garden 6/11/18
Message 4 of 7
Established Contributor

Re: 401k loan alternative ?


@TortoiseWins wrote:

When you say tax intallments and tax estimates it sounds like a business. 

 

You can use a card to pay tax installments, assuming you mean payments for an installment agreement.  via pay1040.com etc. There's just under a 2% fee IIRC.

 

Ah, maybe state taxes? I'm sure that depends. 

 

I got a PL from Marcus recently at 6.99% (I think). Super quick and painless. Yes, the interest is higher, but you wouldn't have to touch your 401k. Soft pull to start, then TU when proceeding. I got an offer with a much higher rate from SoFi, though I'm very happy with them for my student loan refi's. Others here have had success with them for PL's. Also a soft pull. 

 

ETA: Another option would be BT check if you have any available. You said things should lighten up in about a year, so it'd be a quick way to kick the can down the road. 


1+

 

I had to pay my tax bill ($5,000) in installments last year for my federal and state so I called and asked if I could pay with a card. But they wanted to withdraw from my bank so I asked for the final payoff amount and paid in full with a card for both tax bills. I paid the card more than the minimum using my 0% intro APR and I was able to pay it off quickly.

 

There’s some housekeeping to do with the IRS to get them off your bank account so if you need more info send me a message. Smiley Happy

 


Message 5 of 7
Valued Contributor

Re: 401k loan alternative ?

IRS will let you pay the balance in monthly installments at 4%, plus a small service fee. Why take out a 401K loan when you can use the IRS as a lender? 

 

Any balance transfer offers on that Discover card? I seem to always have a "0% for 12 months, 3% fee, directly deposited into checking" offer from Discover. 




Starting scores: 552 EQ, 570 TU, 558 EX Current scores (3/24/17): 739 EQ 735 TU 761 EX
Message 6 of 7
Valued Member

Re: 401k loan alternative ?

Im going to assume this is for the irs... Please tell me you claimed the Foreign income exemption right? which gives americans 2 months extra to file and 110k in exemptions before they tax you. The only cavate you have to spend 330 or more days out of the country.. since your name is expat im assuming you have the days out covered. 

Not EVERY tax preparer knows about this... but i do because i do my brothers taxes which he is in iraq and has been for 8 years.. so he never pays any taxes due to the exemption.

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