Hi! I’m curious if there is any best practice advice for how to handle or at least how to think about the various entries that should result from a loan from a retirement plan.
Take for example a relatively simple case:
Alice’s 401(k) starts off at 100K.
Alice takes a maximum amount (non COVID) 401(k) loan: $50,000 at 5%.
This spawns several Tiller entries:
- Alice’s 401(k) balance immediately drops to 50k (no big deal, balance will update)
- Alice gets a check for $50,000… which for argument, we’ll say she deposits into a Tiller-tracked checking account (balance should update)
- Alice uses that $50,000 to pay off credit cards (this is pretty straightforward too… account-to-account’s plus interest expense)
- Alice has a loan: 60 payments at 5% Or does she? Her retirement account doesn’t track this as a separate account. This isn’t off the books, per se, but the payments are often deducted post-tax out of her paycheck.
- Alice’s 401(k) shows inbound transactions from then on… incoming payments from somewhere … Any ideas on how should these be categorized? Investments? Income from the employer? as a direct deposit split of some kind?
Any advice or ideas would be appreciated!