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Asked 8/2/2011

How long do I have to wait to take out a 401k loan after paying off a previous 401k loan?

How long do I have to wait to take out a 401k loan after paying off a previous 401k loan?

 
 
 
 
 
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Answer 1/2 - Submitted 8/2/2011

There is usually no time limit.. however there are other rules that may come into play.. your max loan is 1/2 your balance or $50000 over any 12 month period. So if you had a very large loan.. at the 50 K Max.. to take another at a large amount may require some waiting. Many plans only allow one loan at a time, until the first shows as paid, you won't be able to take another. Each plan has it's own rules when it comes to loans.. they have minimums, max number of loans..etc... If you have no loans out, and your previous loan shows as paid.. and was not a large amount, you should be immediately able to borrow again. There are specific rules only the administrator would know.. try to apply on line if your plan allows, or call the administrator --

 
 

Answer 2/2 - Submitted 8/4/2011

You should not have to wait for any certain time period due to the payoff date. Your plan will state how many loans you can have outstanding at any one time. Most allow 1. Some allow 2 or more. Regardless, you should be able to apply again once the payoff is posted.

As for the amount you can borrow it depends on you balance and your old loan. If you had no loan you could borrow 50% of your vested balance or $50,000, whichever is less. If you had no prior loans this would be they way to determine your loan available amount. However, when you have recently paid a loan this amount is further reduced by your highest outstanding loan balance in the prior 12 months. So, if today is August 4th and your highest loan balance in the past year was $5000, your maximum loan amount available would be reduced by this amount after the 50% of vested balance ($50000 max) calculation.

None of that last paragraph is a direct answer to your question, however. Your simple question of when you can take another loan is most likely answered with "now".

 
 
 
 
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