TurboDog

Would you take out a loan on your 401K to pay for your ATP? The goal here is to obtain an ATP. I have been at a regional for almost 5 years and there is no hope in sight for an upgrade. Notice I am not talking about withdrawing from my 401K. I am talking about taking a loan on it and paying it back to myself? Thoughts?

mulcher

Absolutely not. If or when you leave you will have to pay the loan back within 30 or 60 days. You should never get a loan or cash out a 401k . Get a low interrest credit card or ask family. An ATP is what maybe $1000. Lower spending the next few months and save the money yourself. There are always things you can do without to save the money. Debt free is a good feeling.

Whacker77

Were it me, I would not remove money from my 401K. The power of compound interest is too great to forgo on an ATP. You already have a job at an airline and you're probably safe if you've been there five years. Unless you have something lined up based on an ATP, I would wait for someone to pay for it. Compound interest is a wonderful thing. JMO.

Flex81

Is there a job you are looking at that you don't qualify for because you don't have an ATP? Most times, an ATP and 50 cents will get you a coke and that's about it... unless you have some PIC turbine to go with it. My advice is: unless you have a job lined up that requires an ATP, it would be a big waste of money.

TristarJS30

Rule of thumb, never take a loan out on a 401k. You'll be paying taxes twice on money that you earned.

TurboDog

The cheapest place I have found for the ATP is 1895.00. However, if you leave your company the give you 30 to 60 days to pay what is left on your loan. Say I took the loan out for 2500.00 and left the company 6 months later. Paying 100.00 per month would leave me with 1900.00 left to pay. If you do not pay the remainder within the 30 or 60 days, your company simply just reports to the IRS that you were paid 1900.00 that was not yet taxed. Then at the end of the year when you do your taxes, you would settle up then.

I don't have 2500.00 on hand. I am looking at getting this ATP to hopefully move on to a fractional or other type of flying that will allow me the comfort of being able to afford such things like this certificate. If I stay where I am at(regional) and continue to live near paycheck to paycheck while not really even puting into my 401K then it seems like I am just sitting victim to this bad situation. Now on the flipside, if I take a loan out from myself to get the ATP, then hopefully I will be able to land a better job that pays a comfortable wage. Then I will even be able to put more into my 401K vs. puting nothing into it right now.

I know it's never good to take from your 401K, however life as a career regional FO doesn't allow you to even put into it.

TurboDog

I dont' believe you wind up paying taxes on it unless you leave your current employer and then it goes to default and default is the same thing as a withdrawal. I need the ATP before I can apply to the fractionals. I am not currently puting into my 401K. The money in there was given to me through a BK settlement at Comair.

TristarJS30

From everyone's favorite lesbian financial guru, Suze Orman:

"Also, never ever borrow against your 401k plan because you will pay double taxation on the money you borrow. Because you don't pay taxes on the money you put into a 401k, when you pay back the loan (which you must do within five years, or 15 years if used to buy a home), you pay it back with money you have paid taxes on. Then, when you retire and take the money out again, you end up paying taxes on it a second time. And that isn't even considering the penalties you have to pay if you change jobs/quit/lose your job, in which case the money is due immediately and subject to taxes and a 10% penalty."

TurboDog

So lets say I get taxed on it twice. Once in 6 months and once in 38 years or so. If we are talking about taxing 2000 dollars now, that is $120.00. Take out 2000.00 dollars at the end and say the tax rate isn't 6% anymore. Let's say it's 10%. That is 200.00 (approx) that I would be taxed on it at the end. We are talking about 320.00.

Now let's look at the big picture. If I got hired by Netjets, or Shares for example, I would be able to max out my 401K each year, whereas I am not able to put anything into it right now. That would far exceed the 2000.00 we are looking at here. Wouldn't it?

Slice

What is your experience? You obviously don't have 121 PIC, do you have TPIC from a previous job? Without it, I don't think an ATP is going to do much for you.