JohnB5677
Expert Alumni

Retirement tax questions

I have found conflicting information on this, both from the IRS

 

You can not roll it over a 401K with a loan into an IRA.  IRAs (including SEP-IRAs) do not permit loans. If this transaction was attempted, then the IRA could be disqualified.

 

From: IRS Retirement Plans FAQs regarding Loans

 

Plan sponsors may require an employee to repay the full outstanding balance of a loan if he or she terminates employment or if the plan is terminated. If the employee is unable to repay the loan, then the employer will treat it as a distribution and report it to the IRS on Form 1099-R. The employee can avoid the immediate income tax consequences by rolling over all or part of the loan’s outstanding balance to an IRA or eligible retirement plan by the due date (including extensions) for filing the Federal income tax return for the year in which the loan is treated as a distribution. This rollover is reported on Form 5498.

 

From: IRS Retirement Topics - Plan Loans

 

I suggest that you contact a retirement specialist for more guidance.

 

A separate article indicates:  If you have a 401k loan and lose or leave your job, you have 60 days to repay it, or you will have to take that as a disbursement, which means you'll get a 10% penalty and pay income taxes on the funds

 

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