Comments on: The 401k Loan: How to Borrow Money From Your Retirement Plan and What You Need to Know

By: Jeremy Vohwinkle

Jeremy Vohwinkle — Tue, 31 Jan 2012 15:52:17 +0000

@meloweee Unfortunately, this is one of the big drawbacks of 401k loans. These loans are tied to that specific plan, and rarely do new providers assume existing loans. The same is true if you lose your job or leave a company before the loan is paid off. You generally only have a specific amount of time to repay the loan in full or else the balance gets treated as a premature distribution and would be subject to taxes and/or penalty.

By: meloweee

meloweee — Mon, 30 Jan 2012 22:34:29 +0000

My company was sold Jan of 2011. The new owner did not take over the 401 k and so we were told to move the money from the current provider. I rolled some money into a ira at my bank. I had a loan and the provider said it must be paid and they would only send the check minus the loan balance they were paying off the loan I wanted to continue my payments and they said I could not. Now I find out the pay off of the loan amount was taxable I cant believe this! Can you explain or is this a mistake. Please helf

By: Boyd

Boyd — Wed, 19 Oct 2011 04:05:57 +0000

I am 78 years old. I have made three withdrawals (loans)totaling $25,000 in the last 60 days plus a MWD prior to that.
I would like to replace the $25,000 but was told I could only replace a single withdrawal if it were in the last 60 days.
Some folks tell me I can replace all three and others have told me I could only replace one.
What is correct?

By: shawn fath

shawn fath — Tue, 18 Oct 2011 23:26:35 +0000

I have a 401k from a previous employer I now work with a different company. I have $180,000.00 in stocks and bonds and $25,000.00 in what they call cash which I’m just getting intrest. Since I am not enrolled in 401k with new job can I stillbarrow money and pay them back over 5 years.

By: Ryan

Ryan — Fri, 14 Oct 2011 15:57:53 +0000

Jeremy, thanks so much for your thoughts on this.

By: Jeremy Vohwinkle

Jeremy Vohwinkle — Fri, 07 Oct 2011 11:34:00 +0000

It really depends on your plan provider. I’ve seen some plans do overnight delivery of the funds if requested. But typically it will take about 5-7 business days. You may want to call your plan if you’ve been waiting a while and aren’t sure when the funds should arrive.

By: vince alario

vince alario — Fri, 07 Oct 2011 08:49:38 +0000

How long does it normally take to receive the funds once a 401k loan is requested? My loan is in a committed status. What does that mean?

By: Boyd

Boyd — Thu, 06 Oct 2011 20:37:22 +0000

If a person is in retirement and has met their minimum distribution, can they take for instance:
)A distribution (Loan) of 5k the first of Nov. and a distribution of 5k the last of Nov. so long as it is all paid back within the 60 days?
(I believe it is called a “Direct Rollover”).

By: jackie

jackie — Sat, 24 Sep 2011 17:49:06 +0000

2010 I withdrew $1000 loan from well-Fargo. Just finish paying off the loan early the monthso I requested for another loan again, they told no because I old deen loan back in 2007 the time I got lay off. If that the case why I got loan last year. I’m paying distribution weekly out of my payroll

By: Jeremy Vohwinkle

Jeremy Vohwinkle — Fri, 16 Sep 2011 21:15:44 +0000

Ryan, typically when you are no longer employed, then you’re no longer able to take a loan. Instead you’d just have to do a straight distribution, unfortunately. If you think you will need to tap into some of that money your best bet is probably to roll it all into an IRA first, and then dip into that as you need it.

It’s just easier and there’s more flexibility to work with distributions from an IRA than working with a 401k. Plus, once it’s in an IRA you will still get the 60-day provision that allows you to repay what you’ve taken out in that time frame to avoid penalties, which is effectively like giving yourself a short-term loan. But one thing worth noting is you only get the 60-day grace period for one withdrawal per yer, so plan accordingly.