401k Loan Amount - What is the max for me?

I took out a 401k loan of 20k in 2015.

I just repaid the remaining balance of $6700.  

Does that loan affect the maximum allowable amount because it's old?  Or does the balance of that loan at any point in the last 12 months lower the maximum available amount?

Can I take 50k or will it be 50k - the balance of that old loan 12 months ago (roughly $10,500).  Is the max 50k or 39.5k?

Yes, I DO have a vested balance over 100k.  Thanks!!!!

Your max at the moment is $39,500

Oh okay thank you.  So basically every month I wait the available loan will be higher?

19 minutes ago, sarathesmith2 said:

Oh okay thank you.  So basically every month I wait the available loan will be higher?

Exactly. 

17 minutes ago, sarathesmith2 said:

So basically every month I wait the available loan will be higher?

Yes. Here's the technical calculation per the IRS:

7.  Jim, a participant in our retirement plan, has requested a second plan loan. Jim’s vested account balance is $80,000. He borrowed $27,000 eight months ago and still owes $18,000 on that loan. How much can he borrow as a second loan? Would it benefit him to repay the first loan before requesting a second loan?

Jim will only be able to take a second loan if your plan’s terms allow it. You’ll find how to determine the maximum amount Jim may borrow in IRC Section 72(p)(2)(A). The law treats the portion of the loan that exceeds the maximum amount as a distribution. Generally, any previously untaxed amount of the distribution is taxable. We’ll use the facts in your question to calculate Jim’s maximum allowable loan balance.

The new loan plus the outstanding balance of all other loans cannot exceed the lesser of:

1. $50,000, reduced by the excess of the highest outstanding balance of all Jim’s loans during the 12-month period ending on the day before the new loan (in this example, $27,000) over the outstanding balance of Jim’s loans from the plan on the date of the new loan (in this example, $18,000), or
2. The greater of $10,000 or 1/2 of Jim’s vested account balance.

Maximum second loan if amount still owed on first loan
Jim’s current loan balance is $18,000. This amount plus the new loan cannot exceed the lesser of:

1. $50,000 – ($27,000 - $18,000) = $41,000, or
2. $80,000 x 1/2 = $40,000

Jim’s total permissible balance is $40,000, of which $18,000 is an existing loan balance. This leaves a new maximum permissible loan amount of $22,000 ($40,000 - $18,000).

Maximum second loan if first loan repaid
Because the law bases Jim’s maximum loan on all of his loans during the 12 months prior to the new loan, there isn’t a significant advantage for Jim to pay off his first loan before requesting a second. If Jim repaid the $18,000 before applying for the second loan, he would be limited to the lesser of:

1. $50,000 – ($27,000 – 0) = $23,000, or
2. $80,000 x 1/2 = $40,000

In this case, the maximum permissible loan amount would be $23,000.

4 hours ago, card said:

Yes. Here's the technical calculation per the IRS:

7.  Jim, a participant in our retirement plan, has requested a second plan loan. Jim’s vested account balance is $80,000. He borrowed $27,000 eight months ago and still owes $18,000 on that loan. How much can he borrow as a second loan? Would it benefit him to repay the first loan before requesting a second loan?

Jim will only be able to take a second loan if your plan’s terms allow it. You’ll find how to determine the maximum amount Jim may borrow in IRC Section 72(p)(2)(A). The law treats the portion of the loan that exceeds the maximum amount as a distribution. Generally, any previously untaxed amount of the distribution is taxable. We’ll use the facts in your question to calculate Jim’s maximum allowable loan balance.

The new loan plus the outstanding balance of all other loans cannot exceed the lesser of:

1. $50,000, reduced by the excess of the highest outstanding balance of all Jim’s loans during the 12-month period ending on the day before the new loan (in this example, $27,000) over the outstanding balance of Jim’s loans from the plan on the date of the new loan (in this example, $18,000), or
2. The greater of $10,000 or 1/2 of Jim’s vested account balance.

Maximum second loan if amount still owed on first loan
Jim’s current loan balance is $18,000. This amount plus the new loan cannot exceed the lesser of:

1. $50,000 – ($27,000 - $18,000) = $41,000, or
2. $80,000 x 1/2 = $40,000

Jim’s total permissible balance is $40,000, of which $18,000 is an existing loan balance. This leaves a new maximum permissible loan amount of $22,000 ($40,000 - $18,000).

Maximum second loan if first loan repaid
Because the law bases Jim’s maximum loan on all of his loans during the 12 months prior to the new loan, there isn’t a significant advantage for Jim to pay off his first loan before requesting a second. If Jim repaid the $18,000 before applying for the second loan, he would be limited to the lesser of:

1. $50,000 – ($27,000 – 0) = $23,000, or
2. $80,000 x 1/2 = $40,000

In this case, the maximum permissible loan amount would be $23,000.

Thank you!  I read that example on the IRS website and that's why I was confused.  Their examples all talk about a loan that was taken out 8 months ago (so within the last year).  I wasn't sure if it was different because this loan was older.

14 hours ago, sarathesmith2 said:

I wasn't sure if it was different because this loan was older.

No. The date the first loan is taken out is irrelevant.

This is a statutory limit, set out in section 72(p) of the Internal Revenue Code.