ATP Loan Vs 401k savings?

Good evening all,

I currently work as a maintenance controller for French aerospace company.

Through three years of working I have saved up 90k in 401k savings.

I am 23 years old currently 15 hours into my PPL at my local flight school In Melbourne Florida with an associates degree in avionics engineering.

Should I use the 401k money to pay for atp flight school and deal with having to pay large amounts back into the 401k within 5 years? or take out a loan with Sallie Mae or Wells Fargo which is a little more work because I need a cosigner for some reason for a 70k loan. Even though my credit score is pretty high.

Leaving my 65k job isn’t too much of a big deal for me right now as I could always go back and earn close to that amount with my experience in the same position if things don’t go as planned for some reason.

Rent and living with my parents isn’t a issue if it comes down to that for now.

My last option would be to keep my job and continue on with the local flight school and build my time and earn my ratings over the few years.

What is the best choice to use the money?

Or is keeping there better?

Thanks in advance.

That’s quite a nest egg. Check with your 401(k) management firm whether you can take out a loan against your account. You can usually take up to 50% in value as a loan and you repay yourself vs. the bank. You can probably finance the rest.


I have a Gold Seal CFI and an ATP with EMB145, DC-9 and A330 Type Ratings. Unfortunately none of that qualifies me to give financial advice, EVEN if the question includes the words flight training. There are however smart people with accounting degrees who are can give you better answers to your question and I recommend you talk to one of them.


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We cannot provide financial advice, but I can tell you that you most likely cannot access your 401k money without paying significant penalties and generally speaking, if you leave your job with a 401k loan outstanding it needs to be immediately repaid.


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As someone with an MBA in finance cashing your 401k is not something I would recommend doing. It will be counted as regular income so it will be taxed based on all your income (65k+90k = 155,000) which means you will pay around 20 ish percent for income taxes and on top of that you will have an early withdrawal penalty of 10 percent.

If you do the math when it’s all said and done your $90,000 401k equals only about $63,000 in cash. However, if you leave the money alone with an estimated 8% interest rate it will increase at a rate of over $7,000 per year. Also keep in mind that the max you can personally contribute to a 401k in 2018 is $18,500 so planning on making large payments in the future to make up for it is not a reality.

It is your money though and you are 100% allowed to do with it what you please, but like Adam said be sure to talk with an accountant before doing anything,

The above is for example only and not to be considered financial advise.



I’m with Jason on this. The penalties are not worth it. I would only ever touch that in an absolute emergency.