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When employed with my previous employer I took a 401k loan(2015 nov) . Then I quit the employer and joined my current employer in Jan 2018 . Then I setup a auto-debit with my fund manager (Fidelity) , for monthly deductions from my bank to pay off the loan. When checking my bank account this Dec 2019, I find that my account has not been debited from January 2019 and doing the research I find that Fidelity had sold it to transAmerica in Jan 2019. I got a postal mail about the transfer from my old employer but nothing about the loans, which made me assume that the loans were taken care of. When I called transAmerica, they say they had defaulted my loan and sent the note to IRS, because they did not receive payment. They said they sent me a postal mail notifying me of the initial transfer and the default, which I did not receive. They emailed me a copy and I see the postal address is wrong in their mail. They do have my correct postal address in their records. But the address in the mail was wrong.So I did not receive it. The person handling is not very knowledgeable and everytime after being on the call for about an hour or 2, she says she will check with someone else. I do see some contradictions in what she says: 1. She says once transferred transamerica does not allow monthly payment of loans and one time payment of remaining amount should have been made. But the default letter says the monthly amount was not payed. 2. She says transfer notice and default notice was sent to my house , but after I requested her to email me the sent default postal mail, I see it has the wrong address 3. First she said nothing can be done as they have notified IRS. But now she said their research team is researching. What are my available options. I did not intend to default and I'm also ready to pay the total amount now to avoid taxes and penalty on remaining amt. Remaining amount is abt 13000.

Hello Everyone, I just received a notice from the IRS today that I was somewhat expecting. With that said, I believe the organization that issued the original 1099 has the year wrong. Scenario: I worked for company ABC for 7 years and took out a 401k loan. I was making regular payments through my paycheck until I left this company at the end of July 2013. I never did receive a 1099 and actually forgot about it until I got the 1099 in May of 2014. (This is when I knew I would be expecting a bill from the IRS in the future) I received the bill today in regards to my 2014 taxes. I believe the distribution from my 401k loan should have been on 12/31/2013 (for my 2013 taxes) based on the following: Per the IRS: "For example, if the quarterly payments were due March 31, June 30, September 30 and December 31, and the participant made the March payment but missed the June payment, the loan would be in default as of the end of June, and the loan would be treated as a distribution at the end of September. " I currently have the organization that managed my 401k doing 'Research' because they were not able to give me answers over the phone. Can someone confirm whether I am correct or wrong? Thanks in advance.

I am currently considering a 401K loan. I'm not sure if it's a good idea. I've read mixed reviews. I am paying a student loan of $18,000 at 8.5% interest. I have other loans as well, but they are at a more reasonable interest rate. I can take a 401K loan out at 4.5% and use that money to pay off my student loan. It seems like I would be saving money each month by paying 4.5% interest instead of 8.5%, right? And I'd be paying the interest to myself, instead of my lender, correct? (Minus the $10 fee to my 401K company). I realize there's an opportunity cost to taking money out of my 401K, but I've heard other people say that they actually grew their 401K by doing this. Any thoughts?

Hi, I'm new here and dying to ask some good questions. Myself and some co-workers have been racking our brains over these. I have what I think is a dandy of a set of questions. First one, with regard to double taxation of a traditional 401k loan. I don't see how the loan portion is not double taxed when you consider the retirement part (not just when you take the loan and pay it back). When you pay back the pre-tax money, you pay it back with after tax money. Then at retirement, when you take a distribution, you pay tax again on that money that was borrowed at some point. So that, to me, is a double taxation is it not? THere's alot online talking about double taxation, but the articles never include the distribution tax (which will vary depending on the size of the tax) at retirement. I am always trying to think long term. Second one, much more involved, and I have to give a bit of backstory. I've been at my company for 13 years now, started when I was 21. I am 34 now. WHen i started, I opened a traditional 401k account. They did not offer ROTH 401k accounts until THIS YEAR. They match 6% no matter which account you contribute to. So, if you're answering this question, you know that the Roth 401k means you pay after tax contributions, then don't pay taxes anymore on that money when you take distributions at retirement. The opposite is true with traditional 401ks, you pay pre tax contributions to your account and then pay distributions at the ordinary income rate depending on the size of the distributions. SO, now for the interesting part. Would it be beneficial to borrow against a Roth 401k instead of from a Traditional 401k? It seems to me that I could exponentially build up a Roth 401k in a more tax efficient manner by at first maxing out the contributions for say, 2 years (17.5k x 2 years = 35k), and then at the end of 2 years, borrow 50% of the balance. I then set up a loan repayment for a term of 1 year and drop my contribution rate down to 6%. The money I borrowed is kept in a savings, to supplement income or to hold in case of some emergency, where I need to pay that loan back off in the event I might lose my job. But, I could effectively save up a lot more than the 17.5k limit per year because you end up paying back that loan quickly (1 year), and then take out a loan for more and more until you reach the 50k limit). This takes some years to achieve obviously. But you never have to worry about distributions ever again becuase you've already paid the tax. And, you're going to pay the tax on your income ANYWAYS, whether i borrow against the Roth 401k and pay it back with after tax money, or not borrow from the Roth 401k and put the after tax money in my savings account. It's just a way to possibly 'loophole' yourself to a higher contribution. Thirdly, I called my HR dept. and also called Wells Fargo advisors and both told me I cannot distinguish where the money comes from if I were to take a loan out. Say I had 100k in a 401k and 100k in a Roth 401k. Then say I apply for a 50k loan. I cannot choose to remove 50k from the Roth 401k specifically. The WF advisor says it all comes out of the 'pile'. There are 2 separate balances, but it is all considered 1 pile to borrow from. I thought that was a little bit silly. I stated that this has major tax implications at Retirement, becuase I would never know how much money came out of which account, and at retirement the taxes on distributions are different. The WF advisor told me in this case money would be pulled equally from both balances. Seems a bit strange. What if I had 100k in the traditional and 20k in the Roth? Are they gonna pull 5 times the amount from the traditional then? Seems odd to me. That's a lot to stew on. Any views on this would be appreciated.