Second 401k Loan and Vested Balance

[Greygoose]

Hello,

I am hoping someone here can kindly help me figure out what’s going on with my 401k. I have a total balance of $1,936, with a vested balance of $1,483. I currently have an outstanding loan balance of $727, which was the highest outstanding loan for this plan of $830. I just paid off a second loan 11 days ago. My statement with an end date of 12/31/2023 reflects a vested balance of $1,702, minus the $830 loan, with a “vested account valance less outstanding loan of $847.”  Despite paying back a second very small loan after this of only $52 the beginning of February (please don’t judge- I had some medical things going on with my child) and paid it back nearly two weeks ago, my vested balance has decreased. As of right now, my “vested account balance less outstanding loan” as of April 1st statement is $730. I have ADD and I’m having a really hard time understanding the numbers on the vested balance part. If I paid back my loan, and I’m continuing to make payments on the first loan of $830, why did my vested balance decrease nearly $300? Why could I take a loan out for $52 before but now after paying it back and increasing my contribution percentage and making payments on the $830 loan, but now the vested balance is so low that if I take 50 percent of that $730 and subtract my outstanding balance, I’m in the negative? I assume it is because the rate of return went down? Again, I am kindly asking you not to judge; I am aware taking a loan isn’t a good idea. But an explanation on what causes the vested balance to decrease significantly would be insightful since I can’t seem to easily find any answers by researching. Thank you. 

[ESOP Guy]

Has your non-loan balance experienced an investment loss during 2024?

 

A vested balance is simply your total balance times your vested percentage for any given source.  Your deferrals are always 100% vested but match money could be subject to vesting.   So don't study what is happening with your vested balance study what is happening with your total balance and then apply the vesting to that to get your vested balance.  

[Greygoose]

My non loan balance increased $200 ($1,700 to $1,900) while my vested balance decreased $300 ($1,700 to $1,400). My vested balance less outstanding loan went from $847 to $730, despite increasing contributions, paying off the second loan and making payments on the first loan. 

[Bird]

There are several possibilities. One is that the reports are wrong; that is, the vested calcs are messed up because of the loan(s). I wouldn't immediately assume that but I've seen it.

Another is that loan fees could be eating at your account. Yes your non-loan balance might increase overall due to contributions and loan payments, but you might be experiencing losses due to loan fees. Loans might have fees of $150 or more at inception, plus ongoing quarterly fees. Not judging, but if you still have loans, you might consider increasing your loan payments rather than increasing your contributions. Conventional wisdom says to maximize your contributions, but if it means you have to turn around and borrow for small expenses, then that is self-defeating. 

[ESOP Guy]

Understand also it is hard to tell you exactly what is happening on a comment board.   But someone at the company that helps your employer run the 401(k) plan should be able to give you an explanation.