Notification rules for plan transfer

[Guest sjloud]

What are the rules governing notification of plan participants when a plan is transferred from one provider to another?

I worked for company A and had a loan against my 401K. Company A was going to be acquired by company B so I left. Because of the way the plan was written, I got to keep my 401K there and continue making loan payments directly to the plan.

company A was acquired by company B.

On 12/31/98 I was notified (via a phone call) that the plan was being transferred to a new provider, that I had no choice but to move as the accounts were frozen (the transfer was to take place on 1/5/99) and that I had to either pay off my loan immediately or accept it as a distribution (with associated penalties). I believe I was inadequately notified. Is this legal?

[Dave Baker]

Dunno about notice re plan mergers in general, but your plan's rights as a lender would seem to me to be governed by the terms of the contract between the two of you: the promissory note and security agreement.

If there's nothing in there giving the lender the right to accelerate the note, I'm not sure they're legally allowed to!