I have a question concerning 401K loans and separating from your current job at age 55? I am thinking about changing jobs on November 15th, 2016, in this calendar year I also turn 55. I have a 401k loan that I may not be able to pay back. Can I use the rule of 55 to avoid paying the 10% penalty? Also if I do not pay the loan back and assuming the separation date is November 15 and the 60 day loan payback period ends in January 2017, in what tax year would the distribution take place? Would it be 2017 at the end of the grace period or 2016 on the day of separation?
