I have defaulted on a 401K loan. I received a 1099 form and it was applied to my income tax last year, including the 10% penalty. The 401K company still shows that loan on my account. I don't understand how that this loan can still be considered outstanding? They have reported it to the IRS on a 1099 and I have paid all taxes and penalties. Does anyone know how this works? It seems to me that this loan should be removed from the account.
I would like to roll over this 401K account into a new company, but I don't know how this will effect my account. Are they going to try to keep the loan amount from my other funds? Which makes no sense because it's my money? Has anyone had this experience? What can I expected?
