401k loan or 401k withdrawal.
This year I’m having some rather expensive medical procedures and my health insurance is only partially covering them. However, they are qualified medical deductions on my taxes.
Needless to say I can withdraw money from my 403b (like a 401k) penalty free to cover them. The withdrawal would count as income but effectively not be taxed because it was a qualified medical expense.
If I pull the money from my 401k it’s done I can just move on and not worry about it any longer. In general this would be a bad idea. However, I’ve been aggressively saving for years and have more saved than I need for retirement and no real desire to stop working.
Alternately I take a loan out against my 403b. Due to the fact that it needs repaid jn 5 years the payment will be almost 1,000 a month. I can afford this but it creates additional stress that in many ways I’d prefer to avoid. It made sense to contribute traditional had I contributed to a brokerage I’d definitely use the brokerage funds to pay this but instead I saved traditional so have to deal with IRS rules on withdrawals.
Which do you think makes the most sense.
A) low stress 401k withdrawal, no need to worry about taxes, won’t materially change my goal retirement date. But not financially the best option.
B) higher stress loan with large payment that will hang over my head for the next 5 years forcing me to continue working 50 hour weeks to pay it.