Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
molson9
New Member

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

 
1 Best answer

Accepted Solutions
dmertz
Level 15

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Since you no longer work for the company providing the 401(k) plan, the plan should have satisfied the loan by making to you an offset distribution.  An offset distribution is eligible for rollover within 60 days.  However, since you are beyond the 60-day deadline, you cannot roll over the distribution and this distribution is subject to tax and to the 10% early-distribution penalty unless you have a penalty exception that applies.

Regarding possible penalty exceptions:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

View solution in original post

9 Replies
dmertz
Level 15

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Since you no longer work for the company providing the 401(k) plan, the plan should have satisfied the loan by making to you an offset distribution.  An offset distribution is eligible for rollover within 60 days.  However, since you are beyond the 60-day deadline, you cannot roll over the distribution and this distribution is subject to tax and to the 10% early-distribution penalty unless you have a penalty exception that applies.

Regarding possible penalty exceptions:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

View solution in original post

re2boys
Level 9

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Not sure if you had a question, but if you default on a 401K loan, it is converted to a distribution (you got the money out of plan) and you should receive a 1099R.  If it is an early distribution (you are below normal retirement age), there is also a 10% penalty.

molson9
New Member

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

yes, the questing is, I'm looking for a strategy for not paying tax or penalty and would like a role over or hardship option that I overlooked. TT does not give you many words to describe the situation.
molson9
New Member

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

please help me, I need a coloring book
re2boys
Level 9

Layed off can't make 401K payments Loan declared dinq & 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Well why didn't you ask that to begin with?  See if any of the situations outlined in this answer fit your situation.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2356803-what-are-the-exceptions-to-10-penalty-to-early-withdrawal-...>
molson9
New Member

Layed off can't make 401K payments Loan declared dinq &amp; 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

this thing is snowballing, I wish I could just deposit the money into another 401 and call it even
now I'm probably going to burn a 59-1/2 distribution to pay penalties.  Now I wish I just invested in the stock market or bank......
re2boys
Level 9

Layed off can't make 401K payments Loan declared dinq &amp; 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Gotta have an emergency fund for dealing with unexpected as loans are expensive.
molson9
New Member

Layed off can't make 401K payments Loan declared dinq &amp; 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

I agree, but losing 45% of you income can suck emergency funds down quick. This expense took a year and a half to catch up with me. And Bam I'm screwed!
molson9
New Member

Layed off can't make 401K payments Loan declared dinq &amp; 60 days have elapsed they now want tax and a penalty 401K says it too late and U cant pay the loan to another 401K

Damn the crayons keep breaking. I need a therapy dog!
Dynamic AdsDynamic Ads
Privacy Settings
v