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Asked 9/24/2010

Will my 401k loan roll over or default when my company changes proivders?

My company was sold. the new company has a different 401k provider. my 401k will roll over but will the loan?

 
 
 
 
 
Answers

Answer 1/4 - Submitted 9/24/2010

The new 401K vendor will just simply take over the plan as well as the 401K accounts. It will not affect your 401k loan at all. The plan will be the same, bur you will have different investment options only. Nothing to worry about.

 
 

Answer 2/4 - Submitted 9/25/2010

This is up to the new administrator.. they do not have to take over these loans, if they choose not to. This is something you should ask the current, or new company if you have access to them. There will be a blackout period (30-60 days) while the transfer occurs... most do take over loans, but the are reamortized... you cannot be sure without confirmation.

 
 

Answer 3/4 - Submitted 9/19/2011

It is almost always the case that any outstanding loans will be moved to the new provider so you shouldn't have to worry. However, it is not mandatory that they take them so check with your employer. I would say there is a 99% chance they will take the loans.

One thing that you might find is that the new provider will re-amortize your loan. This sometimes happens because the prior provider got off track on the payments or did not recalculate the balance with each payment so when the new provider calculates the outstanding loan with the remaining loan term they may change the payment amount needed to pay off the loan on time.

 
 

Answer 4/4 - Submitted 9/20/2011

Everything should roll over to the new provider pretty seamlessly. That means whatever is in your 401(k) account, as well as the balance you still owe on the loan. The new administrator may change the terms of the loan, with minor alterations in payment amount, so pay close attention. If the changes are unfavorable to you, try speaking with them to see if there's any way they will conform to the conditions under the old plan.

The rest of your account will likely transfer over as well. Rather than a formal roll over, as the IRS requires, this is more of a change in management. All 401(k) balances and contributions are just shifted to the new provider. In almost all cases, this means the same for loans.

Check with a representative from the provider or your Human Resources, if you aren't sure. Try to pay the loan back at a quicker rate, especially if there's any change in terms. The sooner you unload the debt, the better off you will be. Then there will be no worries about big shakeups in the 401(k) administration behind the scenes.

 
 
 
 
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