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Asked 9/2/2009
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What steps do I have to take to obtain the balance in my 401k? I have a 401k w/ a vested bal. of $9399.82 on which I have an existing loan of $583.89. I'm in need of the avail bal. and need to cash-out the 401k. The firm holding the plan has told me I must first satisfy the existing loan's bal. before cashing-out. Is it possible to have the amt. of the existing loans' bal. taken from the vested bal. and applied to the loan so as to satisfy the loan,then have the remaining bal. sent to me? What legal recourse do I have in this regard? |
Answer 1/1 - Submitted 9/2/2009
I assume you no longer work for the company? I have never heard of a company requiring you to pay back the loan prior to cashing out..
We close account every day.. the forms for distribution give you the option to pay back the loan.. though I have never seen anyone take it.. the balance is deducted from the vested balance, and taxed along with it..
Legally, if the plan document allows them to do this, you have no recourse.. Each sponsor designs their plan -- ask the administrator for this in writing, from the plan doc or SPD...
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