403b loan

[Christopher Singley]

On Tue, Feb 11, 2014 at 3:09 AM, Dennis Powless <claven123 at gmail.com> wrote:

> I guess your right... I was trying to make it so I wouldn't have to double
> enter things, but it seems that is not possible.
>

You can avoid this accounting altogether. I think if you color inside the
lines, these loans effectively have zero tax consequences - you aren't
taxed on the loan proceeds, and you get no tax benefit from repayment of
principal or interest.  So if you also don't care about GAAP consequences
(i.e. you're not especially interested in tracking the investment
performance of the loan interest) then you can eliminate the loan upon
consolidation.  Just wipe the whole thing off your balance sheet and P/L.
Abracadabra.

To enter the transactions, just take the cash out of 403(b) and put it into
your personal cash.  Then put it back the other way with paycheck
withdrawals or other source of loan repayment.  Use your own loan repayment
schedule on a spreadsheet, or whatever figures are handed to you by the
plan administrator.  It should be a level-payment setup, so it'll be easy
to reuse the same transaction.


> In the end I decided to treat the 403b loan as an asset and a subaccount
> of the 403b fund account.
>

If you do it this way, make sure to also create a 403b loan liability
account for you personally.  The loan is a liability for you, and an asset
for the trust.