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Asked 12/22/2009
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Employer won't stop payroll deduction at my request My employer says they can't stop payroll deductions for my 401k loan because it would put the entire plan in jeopardy. My husband's sudden illness and permanent disability with loss of income after taking out the loan has put me in dire financial crisis. So they are saying I can lose my home but the loan has to be paid. I gave written request to stop deductions. Plan is not administered by my employer. |
Answer 1/1 - Submitted 1/1/2010
They are correct, as long as your husband is receiving a paycheck, they cannot stop the loan payments. It is not optional to take agreed payments out. Should the paychecks stop, he be laid off, or on leave, they will default the loan after a few months. It is not a decision for them, it is ERISA law regarding the issuance and payments of loans out of a retirement plan.
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