I want to do a direct rollover to an IRA. How long do I have to do this before there are tax consequences? Or can I stay with the old employer's plan indefinitely? If so, what happens to the loan?Thanks.
2007-10-31 05:17:24 · 3 answers · asked by M W 1 in Business & Finance ➔ Personal Finance
The loan issue should have been addressed already. You should have had to pay it back by now. If not, there is a chance they liquidated part of your plan to pay for it and the distribution will be penalized and taxed as ordinary income.
You need real help (not Yahoo! Answers help) right away.
Get this taken care of so you get a nasty surprise at tax time.
good luck!
2007-10-31 06:09:21 · answer #1 · answered by Rush is a band 7 · 0⤊ 0⤋
At the firm I formerly worked at (Co. A), some of my collegues had outstanding mortgage loans written against their 401Ks. When their jobs were sold to another firm (Co. B) they were forced to pay the balance of the loan by the last day of employement with Co. A. Co. B was aware of this burden and chose not to re-wite the loans on the new 401k plans. Its the companies choice. In this case alot of people were forced to find hard-money loans at stupid high interest rates to cover the immediate cost of covering the loan.
2007-10-31 12:25:36 · answer #2 · answered by brpinard 2 · 0⤊ 1⤋
You can leave your 401k in the old plan. Once the "repayments" of the loan stop, they should deduct the money from your 401k to repay that loan and the amount in your 401k will be reduced.
If you roll over your 401k, they will automatically reduce the amout you get to roll over to pay off the loan and you have 60 days to roll it into your new 401k or retirement account before you have any tax implecations.
2007-10-31 12:21:24 · answer #3 · answered by Timeflo 4 · 1⤊ 1⤋