Bill Jacqmein 401K loan

Andrew Sackville-West andrew at
Thu Dec 29 13:37:44 EST 2005

Bill Jacqmein wrote:
> I had a brain storm (aka too many dental appointments).


> In one of the previous postings on the 401K loan had a description of 
> being the payee and the payer of the loan.
> So the way I have it going now is.
> There is a entry accounting for a payroll deduction dropping to an 
> interest expense account and the loan liability account.

okay that makes sense.

> The above transaction generates income from the interest and principal.

I suppose it generates income for the interest, but there is an 
offsetting expense to you as well for the interest, so its a wash. There 
may be tax implications though -- talk to an accountant!

> A transaction hitting a 401K income account (there should probably be 
> split between interest and principal) and the 401K asset account is made.

again, this income to the 401k would only be to the extent that the 
payment was interest. The principal payment would be return of capital 
(?) and not income. All I can suggest is that the whole thing should be 
a wash -- a net zero transaction for everything except whatever small 
amount goes to the bank for handling the whole thing. Again, IANAA and 
for best results consult one (or one here speak up!) on what this all 
means. And my advice is always to make it look as much like real life as 


> On 12/28/05, *Andrew Sackville-West* <andrew at 
> <mailto:andrew at>> wrote:
>     brydone at <mailto:brydone at> wrote:
>      > If the loan is for principal only, I think the simplest entries
>     are this
>      > when setting up your account:
>      >
>      > Loan Account  Cr401,000 (owing your lender)
>      >
>      > Bank Account         Dr 401,000 (putting money into your account from
>      > lender)
>      > ------------------------------------
>     ummm... I think OP was refering to a loan from his 401k retirement
>     account. your explanation was good, but do you have one for this
>     application? He has to track it both in his bank/liability accounts but
>     also within his 401k account as some of his liquid assets in that
>     account will be turned into a loan...
>     A
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