Heloc to pay of 401k loan

Can a person apply for an equity line of credit to pay off a
401k loan if one loses his(her) job. The 401k loan is
already reality with 3 years left on the balance. Losing
the job could be in two months, two years, in between, or
never.

I know the key would be to take out the line before one
loses the job. Right? Are their any fees (upfront or
annual) involved if one ends up not using the line?

Is a Heloc tax deductable? Can a Home Equity loan work for
this purpose also? I thought you had to prove to the bank
that a home equity loan was for home improvement to get the
deduction. Am I wrong? Thanks

~Marty~

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Reply to
Marty
See IRS Publication 936 for information about the deduction of HELOC interest, which was your only tax question.
Reply to
Phil Marti
That is an excellent plan of attack, Marty, one I wouldn't hesitate to recommend to a client. Trouble is, last year, this married couple didn't ask me in time and they each got one humongous 1099R form when their textile plant closed. ChEAr$, Harlan Lunsford, EA n LA
Reply to
Harlan Lunsford
Yes. You don't have to prove anything to the bank for tax purposes. IIRC, interest on the first $100,000 is deductible. Above that, it's deductible only if used for home improvement; you have to prove that to the IRS if audited, the bank doesn't care. Seth
Reply to
Seth

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