I have a quick question that hopefully someone can answer. For reasons I wont go into here, I'm going to need to cash out my 401k. I have taken a loan out
two years ago which went into default, then was reported as part of my income, and the taxes were paid. Can I cash out my remaining 401k balance, minus the 10%
penalty, or would the defaulted loan be deducted first, then I receive the remaining balance? Thank you
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Cashing out with an outstanding loan.
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 borrelli |
Cashing out with an outstanding loan. |
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Posts: 1 (10/29/09 16:49:38) |
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ralexander |
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Posts: 157 (10/30/09 05:11:07) |
The loan balance won't reduce the amount you receive from your 401k, so whatever your vested balance is, that will be the gross distribution amount.
R. Alexander
lowcost401k.com |
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retirementplananswerman |
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Posts: 26 (10/30/09 13:52:17) |
In most if not all recent cases, defaulted loans are supposed to continue to show as part of your account balance. So obviously if this is the case with you,
the plan will reduce that balance to get to your amount due.
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