I had a 401k loan taken out last year and was laid off two months later. In my severance package, I was told I could maintain payments and it would be fine. I had been doing so for six months until suddenly, the balance was withdrawn from my 401k to pay the loan off.
I asked Vanguard who said I needed to contact them to set up a payment plan before the quarter after the quarter I was terminated, which I was not aware of. They said I am subject to taxes and penalties next tax season, but I may be able to avoid this with an indirect rollover. They wouldn't talk to me anymore about it and suggested I seek a tax advisor.
From what I understand, an indirect rollover is basically just be loading money into an retirement account. If I just put the funds into any retirement account before next tax season (that's the time frame they gave me), will I avoid the taxes and penalties? Does it have to go into the same account? I don't know if I can even put more funds into that account. Do I need to complete any forms as I deposit it so it's accounted for as paying back that disbursement?
Thanks ahead of time
