IRS wants my client to take a loan from her 401k.  Client adamantly refused as this is her only remaining savings. The IRS would not accept the agreement until she makes the loan.  She is considering taking a withdrawal of 100% of the 401k, then calling the IRS back to say she has no 401k.  This won't work; in effect she would not be fully truthful if she didn't also say that her bank balance increased (where she would deposit the loan.)  The IRS wants a $200 monthly payment.  She can pay $50 per month.