Loan Payoff - Deceased Participant

[MGOAdmin]

If a wife takes a loan from a 401k plan and passes away before it is paid off, can the husband pay off the loan before the end of the quarter following her passing? Or is it automatically defaulted?

[Bird]

If it is not addressed in the loan policy then I'd say you are free to do what seems reasonable.  I think it is reasonable to allow the payoff.  I can't imagine any consequences as long as it is not in direct contradiction to plan terms/loan policy.

[Larry Starr]

8 hours ago, MGOAdmin said:

If a wife takes a loan from a 401k plan and passes away before it is paid off, can the husband pay off the loan before the end of the quarter following her passing? Or is it automatically defaulted?

No doubt in my mind. The plan doesn't care where the repayments come from, assuming the loan policy doesn't say upon death it is defaulted (which it shouldn't).