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Asked 6/15/2011
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I have two loans through my 401K at work that total about $6500.00. I have two loans through my 401K at work that total about $6500.00. I'm retiring the first day of the coming month. Do I have to pay these loans back through my current employer since the money was mine to start with. The interest is tacked on at the beginning of the loan process. I don't intend to move my funds from my current financial institution, but due to a decrease in monthly income I don't want to continuing paying on the loans.
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Answer 1/2 - Submitted 6/15/2011
When you leave your employment, you're usually given the option of paying back the loan. Some plans say "all at once" and others allow you to continue to make payments for a few months. If you don't want to pay it back, it will count as a distribution from the account. It is added to your regular income but wouldn't be subject to an early distribution penalty.
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