Analyzing Retirement Plan Loans, Especially Those for Principal Residence Acquisitions, Can Be Complicated
Gill, S. L., Oestreich, N.
Type of Research
2014, Before July
Contributions to practice (applied research)
Analyzing retirement plan loans can be complicated due to the fact that the loan proceeds are no longer generating the normal returns that they were earning in the account, but are generating interest income that is being paid by the owner. The interest expense is generally not deductible and is taxable to the owner on a tax-deferred basis. This project is an attempt to analyze the net cash flows to the owner to better inform the owner/participant’s decisions and evaluate some policy options for lawmakers.