401K to pay off Student Loans
I’m all but certain that there is no special provision for using 401K funds to
pay off Student Loans but I did want to be certain I wasn’t missing something
A friend is under the impression that after 5 yrs (our 401K match vests immediately,
so not sure where she gets the 5 yrs), a person can use their 401K to pay off Student
loans …..AND she may believe without tax but definitely without penalty.
Disregarding the wisdom of that approach, is there any such provision?
(I haven’t found any such rule)
Thanks for the help!
Permalink Submitted by Alan Spross on Thu, 2011-07-21 00:06
No such provision.
Probably the closest to this, but still miles apart would be if the plan hardship distribution provisions include student loan retirement. But that distribution would be taxable and subject to 10% penalty.
Permalink Submitted by W Dobroski on Thu, 2011-07-21 00:10
Thanks much Alan!