Strategy to use HELOC then repay from 401k after age 59-1/2 & student graduation.

[twoinanddone]

Now - you borrow $100,000 and your current marginal income tax rate: 30%. The income tax for that 401(k) loan is $30K.

Then you have to pay back the loan.

There is a difference between a 401k loan and a withdrawal. If you take a loan, you do not have a 30% tax now; there is no tax due now for a loan, and no penalty.