QUESTION
Can my friend open up a savings account and add my name to the account?
Asked on Jun 28th, 2013 on Taxation - Missouri
More details to this question:
I applied for a loan. I must show that I have $50K as collateral. A friend will lend me this money from a 401K plan, her job closed down. I want to safeguard her savings in case something happens to me. And when the Internal Revenue Service’s comes knocking, it will not a problem in proving where the money came from.
2 ANSWERS
Probate Attorney serving St. Louis, MO
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Edward L. Armstrong, P.C.
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There are restrictions on loans taken from 401(k) plans. If they are taken out for a purpose which is not permitted there would be immediate income taxes and penalties due. Even if the loan is legal it must be repaid within 5 years. There should be full disclosure to all concerned.
Answered on Jul 05th, 2013 at 4:43 AM
Bankruptcy Attorney serving Florissant, MO
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Law Offices of Thomas Corcoran Phipps
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You should sign a note showing that the money is a loan from your friend. Then you can show the IRS that the money is not income to you.
Answered on Jul 01st, 2013 at 2:13 PM