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Showing results for tags '401k loan repayments'.
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I was wondering of what advice/suggestions you might have for me. I have a 401k plan client with a participant that went on leave April of 2019. His 401k loan payments were suspended then. By rule, these payments can be suspended for up to a year (April 2020). Employee is still sick and still on leave. Client has NOT defaulted loan yet (yikes, should have been defaulted April 2020). All the employees of this company were affected by COVID from a financial standpoint. Some were furloughed, others had hours cut, etc... This employee in question will eventually come back. Client and I are trying to see if it would be wise/legal to use the CARES Act loan payment suspension relief to give this participant another year (from April 2020 when original one year suspension was over) maybe until April 2021 to begin payments again vs defaulting loan. Any suggestions/thoughts? Tax on defaulted loan will obviously be a burden..
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If an employee goes on leave and is receiving third party payments such as third party sick pay or short term disability, can his/her 401k loan repayments still be suspended for up to a year under the unpaid leave exception? The employee is not receiving any payments from the employer - the third party sick pay is not paid directly by the employer but still shows up on the W2 from the employer. Since the employer is not actually paying the money (it's paid on their behalf) and cannot withhold from the payments, does this count as unpaid leave?
