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Asked 11/16/2007

How to get out from under 401K loans?

Before we were married, my husband borrowed heavily from his 401k. About $47,000 heavily. To pay back his loans the citistreet people take $1,300 out from his paycheck every two weeks, which leaves us barely enough to scrape by. I want to know if there is anything we can do to get out from underneath this mess. It is a state plan that he has and he has had the plan for almost 19 year. He has asked citistreet what options there may be, but all they do is stall or beat around the bush - they are never willing to give a concise answer. He did go to the HR department to ask if anything could be done. They told him the only way he could terminate his plan is if he retires - which would leave us with no medical benefits at all. We have exhausted all avenues that we know about. Any advice would be much appreciated. I am tired of not being able to afford the most basic of bills.
If the jerk named digdowndeepseattle actually had an email - I would be giving him a piece of my mind. Neither me or my husband are liars. If I were going to lie why even bother asking the question? Obviously this person believes that interest rates are set in stone and only in the numbers that he/she provides. I have read the pay stubs and the 401 papers. It's not one loan that was taken out - it was several and the rates vary on each loan. The payoff is not 5yrs either - each are 1-2 year payoffs. Yet another assumption on this persons part. What a presumptious jerk. If anyone has an answer that is serious and not offensive I would love to hear it.
He didn't use the $ to buy stuff - he used it to take care of his mother for 5 years - she had Alzheimers and very limited funds which turned into $0 funding after 5 months.

 
 
 
 
 
 
Answers

Answer 1/1 - Submitted 11/16/2007

Typically you have to pay the loan back over a five year period which leaves you very few options. There is very little flexibility on repaying a 401k loan.
Ask your employer (his) for a copy of your Summary Plan Description for the plan. That will spell out what can and can not be done and under what rules you must follow on the repayment.
Good luck.

 
 
 
 

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