I received a 401k loan and my company was taking out payments out of my pay check each week. Then they restructured and the new company says they do not want
to assume the loan and they are not taking out payments anymore. What happens now?
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401k loan
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 denemann |
401k loan |
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Posts: 1 (01/21/09 19:09:07) |
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retirementplananswerman |
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Posts: 6 (01/22/09 17:39:20) |
Unfortunately, the plan can legally declare it's not allowing loans anymore. The worst case scenario may occur. The outstanding balance becomes a taxable
distribution. This could occur as soon as the first scheduled payment is missed, though it's through no fault of your own. Sometimes a plan will allow a
'cure period' in which you can avoid the 'deemed distribution' by catching up on the payments. In your case it could mean paying off the
remaining balance. The cure period can be as long as the end of the calendar quarter following the quarter when a scheduled payment is first not made (or not
accepted, in this case.)
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