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What are the tax consequences,

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Question - Andrea, age 42, ran into some financial difficulties in the past 2 years. The company she works for provides a 401(k) plan for retirement. Both Andrea and the employer have contributed to the 401(k) for a number of years. The company allows employees to take out a loan from their 401(k) in the event of financial hardship. A loan is nontaxable to the employee as long as specific repayment rules are followed. Andrea took out a loan 12 months ago. She pays the loan on a quarterly basis and was scheduled to make 8 more payments in order to repay the loan. Unfortunately, the company has also been undergoing financial difficulties and had to downsize. Andrea was laid off 4 months ago. She is not currently able to make payments on the loan. What are the tax consequences, if any, to Andrea in this situation?

Reference no: EM132075893

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