I took a loan against my 401(k) account in April of 2004. My employer did not start taking payment from my pay checks until October of 2004, after I brought it
to thier attention. I was told the loan would be re-amortoriezed, and a new payment would be taken each pay check automatically. I never missed a payment I
have records showing I paid towards the loan every pay period from 2004 till 2008. However in 2008 I was told by my employer that a number of payments were not
made and it was past the ability to be "cured" and they deemed the balance as a taxable distribution. I am now facing a 10% penalty fee and this has
to be claimed as income on my 2008 tax return. My question is, is my employer at fault?
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deemed 401(k) loan
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 fedup |
deemed 401(k) loan |
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Posts: 1 (03/01/09 08:51:13) |
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ralexander |
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Posts: 28 (03/02/09 06:47:13) |
While I don't know of an all-encompassing rule placing fault for this situation (even though there might be one), my suggestion is to thoroughly read your
promissory note you should have received when you took the loan. If you don't have it, try to obtain one. I think that would state who's responsibility
it is to make sure loan payments are made correctly. Do they have dates stating which payments were missed? Then you can pull paystubs and show them that the
funds were taken out (if that is the case, then your employer is almost definitely at fault).
R. Alexander
lowcost401k.com |
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fedup |
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Posts: 2 (03/22/09 06:50:53) |
Hi, think you for your response, and yes I have all my pay stubs from 2004 to current and sent my company and Schwab copies showing that no payments were
missed on the loan. I also showed proof that the loan was reamortorizied in October and the 1st payment due in November. The 401k was with Fidelity, then my
company moved it to Schwab, again I never skipped a payment since it was automatically deducted. But now my company is saying it's not there fault, because
the loan information wasn't correctly delivered to them by Fidelity, which is not true. I have proof all around that this was not due to my negligence, but
I am not getting anywhere with these people. What other courses may i take that won't cost me an arm and a leg to fix this. They won't even send a
corrected 1099 form, while this is figured out.
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ralexander |
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Posts: 56 (03/23/09 05:32:10) |
Try your best to find the loan agreement; look for text that could shed some light as to who is "at fault." It MIGHT specify there; otherwise, try to
match up the loan deductions that have been occurring since the point that they've said they did not receive them. If the money is deducted, and not being
applied to your loan, where is it??
R. Alexander
lowcost401k.com |
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