Scott Posted February 11, 2000 Posted February 11, 2000 Company A sold some assets, but the sale did not constitute a sale of "substantially all of the assets in a trade or business" so as to allow for a 401(k) distribution to the employees affected by the sale. As a result, the employees, who now work for the purchaser, still have accounts in Company A's 401(k) plan. Some of the employees had loans under Company A's plan and are paying the loans with checks. Can these former employees of Company A take new loans from their accounts in Company A's plan? The plan does not appear to specifically prohibit such a practice. Would there be any reason Company A would not want to permit this if it is otherwise allowable? [This message has been edited by Scott (edited 02-11-2000).]
Guest hank Posted February 15, 2000 Posted February 15, 2000 Company A' former employees are still "participants" in company A's plan. If participants are permitted to borrow from the plan, I don't see why the former employees can't still borrow (forgive the double negative).
david rigby Posted February 16, 2000 Posted February 16, 2000 What does the plan say? Does the Plan restrict loans to "active participants" or some other terminology? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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