Depending on where and who took over the IRA, you might be able to continue paying back the loan. Also, you are eligible for the over 55 clause because even through you were hired by the new company, your old company went belly up.

The balance of the remaining 401k funds (with John Hancock Pensions) were rolled over into a new IRA at Fidelity. The loan was not transferable which is why it was considered in default and declared as an early distribution.

Unfortunately the only option would have been to pay it in full before the rollover, They should have given you this option. At this point it has been reported to the IRS as a distribution, and subject to tax and penalty. This is happening a lot lately, too many companies cannot afford to keep the plans--The do cost the companies quite a bit annually.

The company I work for has been acquired by another company with a completion of the acquisition on March 1, 2010. My current employers 401(k) will be terminated following the completion of all legally required testing, audit procedures, and government filing requirements. Upon termination of the Plan, I would like to receive a taxable distribution. Currently, my total account value is $13,600 with a vested amount of $10,500. I am under the age of 59 an a half. My employer said the actual termination of the plan could take several months. I would like to take my taxable distribution as soon as possible. With that said, can I take my taxable distribution before the 401 (k) plan completion of all legally required testing, audit procedures, and government filing requirements? Also, based on the amount of money I have in my account how much money will I receive after the mandated tax withholding by the IRS?