401k loan?

[Dale Alspach]

I think you about have it. The last piece is the way that you credit
earnings from 401k investments. You may already have some sort of Tax
Deferred Income account which you use to show earnings by whatever is in
your 401k. The interest is just another type of 401k income. It sounds like
you need to separate things a little especially if you are permitted
to treat the interest as though it were paid to an external entity for tax
purposes. Thus your mortgage loan liability is also a loan asset within
your 401k. The principal payment is actually a transfer between a specific
asset within your 401k to some general account cash (probably a money market or
other temporary holding account). The first loan payment
would look something like this:

1232 4/15/02 Mortgage payment     Checking asset               50.00
             principal            mortgage liability     5.00
             interest             mortgage expense      45.00

 1   4/15/02 Mortgage payment     401k cash asset       50.00
                                  401k loan asset               5.00
                                  401k interest income         45.00

There are two transactions. The first is from current funds and the second
is for the segregated 401k funds.

The loan itself would be a transfer within the 401k

      3/15/02 Loan investment     401k cash asset          1000.00
                                  401k loan asset 1000.00

and for current funds you would create a liability and an asset account

      3/15/02 House purchase      House asset         1100.00
              Loan                mortgage liability             1000.00
1225          Down payment        Checking asset                  100.00

or pass the loan through your checking account as you indicated.
I am neither an accountant nor a tax professional so this is just a way of doing
the accounting. YMMV

Dale Alspach

>%K, I come here begging for help.  I took out a 401k loan to buy a house. 
>%he "loan" works by paying both principal and interest back into my 401k. 
>%'m wondering how to represent this by the double accounting in Gnucash.

>%o, I think things should go as follows:

>%  I have my Asset:  Checking, my Asset:  401k, and my 
>%       Liability:  401k loan accounts.
>%  Things get sold in my Asset:  401k account.  This money (say, $1000) 
>%       goes to the Asset:  Checking account.  Also, this $1000 needs
>%       to be represented in the Liability:  401k loan account.
>%  Now, every paycheck, I pay back an amount (say, $50).  This amount
>%       is comprised of interest and principal.  All $50 goes back into
>%       the Asset:  401k account.  However, only the principal affects
>%       the balance in the Liability:  401k loan account.

>%ow does this get represented in Gnucash?  Small words spoken very slowly
>%s appreciated.

>%hanks.

>%====
>%- 
>%hristopher Scott
>%abe5@yahoo.com