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by rcdrury on November 22nd, 2008
If your 401(k) plan is being discontinued because of the company closure, any unpaid loan balance will be treated as a distribution, incurring ordinary income tax, plus a 10% IRS penalty if you have not reached age 59.5. It may be possible for the account to remain in place until you are able to repay the loan.
As for the amount remaining in the old plan, you can roll the funds into another qualified plan. You can transfer the funds into your new employer's plan. This is relatively simple, but offers no particular advantage to you except that it remains tax deferred. Rolling the funds into a self-directed IRA is normally the best option, allowing you full control over how and where the money is invested.
Rob Drury, 210-387-8875, rob@safemoneyconcept.com
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You're reading I AM CLOSING MY 401K AND I HAVE TAKE OUT A LOAN ON IT. I ALSO GOT LAYED OFF.MY COMPANY CLOSED DOWN IN SEPTEMBER.MY QUESTION IS HOW MUCH WILL BE TAKEN FROM MY 401K AND IF IT'S WORTH IT?
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