What are my options for a 401k loan wrongly reported as defaulted

When employed with my previous employer I took a 401k loan(2015 nov) . Then I quit the employer and joined my current employer in  Jan 2018 . Then I setup a auto-debit  with my fund manager (Fidelity) , for monthly deductions from my bank to pay off the loan.

When checking my bank account this Dec 2019, I find that my account has not been debited from January 2019 and doing the research I find that Fidelity had sold it to transAmerica in Jan 2019.

I got a postal mail about the transfer from my old employer  but nothing about the loans, which made me assume that the loans were taken care of.

When I called transAmerica, they say they had defaulted my loan and sent the note to IRS, because they did not receive payment.

They said they sent me a postal mail notifying me of the initial transfer and the  default, which I did not receive. They emailed me a copy and I see the postal address is wrong in their mail.

They do have my correct postal address in their records. But the address in the mail was wrong.So I did not receive it.

The person handling is not very knowledgeable and  everytime after being on the call for about an hour or 2, she says she will check with someone else.

I do see some contradictions in what she says:

1. She says once transferred transamerica does not allow monthly payment of loans and one time  payment of remaining amount should have been made. But  the default letter says the monthly amount was not payed.

2. She says transfer notice and default notice was sent to my house  , but after I requested her to email me the sent default postal mail, I see it has the wrong address 

3. First she said nothing can be done as they have notified IRS. But now she said their research team is researching.

What are my available options. I did not intend to default and I'm also ready to pay the total amount  now to avoid taxes and penalty on remaining amt.

Remaining amount is abt 13000. 

17 hours ago, EM said:

When employed with my previous employer I took a 401k loan(2015 nov) . Then I quit the employer and joined my current employer in  Jan 2018 . Then I setup a auto-debit  with my fund manager (Fidelity) , for monthly deductions from my bank to pay off the loan.

When checking my bank account this Dec 2019, I find that my account has not been debited from January 2019 and doing the research I find that Fidelity had sold it to transAmerica in Jan 2019.

I got a postal mail about the transfer from my old employer  but nothing about the loans, which made me assume that the loans were taken care of.

When I called transAmerica, they say they had defaulted my loan and sent the note to IRS, because they did not receive payment.

They said they sent me a postal mail notifying me of the initial transfer and the  default, which I did not receive. They emailed me a copy and I see the postal address is wrong in their mail.

They do have my correct postal address in their records. But the address in the mail was wrong.So I did not receive it.

The person handling is not very knowledgeable and  everytime after being on the call for about an hour or 2, she says she will check with someone else.

I do see some contradictions in what she says:

1. She says once transferred transamerica does not allow monthly payment of loans and one time  payment of remaining amount should have been made. But  the default letter says the monthly amount was not payed.

2. She says transfer notice and default notice was sent to my house  , but after I requested her to email me the sent default postal mail, I see it has the wrong address 

3. First she said nothing can be done as they have notified IRS. But now she said their research team is researching.

What are my available options. I did not intend to default and I'm also ready to pay the total amount  now to avoid taxes and penalty on remaining amt.

Remaining amount is abt 13000. 

I believe you are screwed. YOU were responsible for making sure the payments were made.  When the first (or second) payment in 2019 was missed, it was YOUR responsibility to follow up.  Ignorance is just no excuse.  You did default (under the law) and I would guess their "research" (for what it is worth) will come up with the answer that you are SOL.  Sorry.

One possibility - if the distribution code (box 7) on the Form 1099-R says "M" (it may say "1M" or "7M" or similar) then you have a "qualified plan loan offset" which means you can roll over the loan, thus avoiding current taxes and penalties, by repaying the defaulted amount to an IRA by your tax filing due date.

Based on the facts provided, it does not sound to me like you would have a qualified loan offset, but there may be additional facts I am not aware of. Your plan administrator or custodian would be in a better position to make that determination.

Form 1099-R is required to be mailed by the end of January. You'll want to make sure they have your right address for this.

I can't address your individual case, EM, but it seems to me that in the abstract if a participant took steps that the employer represented would ensure that his or her plan loan was paid each month, and then there was a recordkeeper change and Recordkeeper 1 or Recordkeeper 2 flubbed the handoff, then the loan may qualify to be corrected under Section 6.07(d) of Rev. Proc. 2019-19 (EPCRS). Gets technical. You may want to ask "them" to check it out. The key, again, is that this was something that, had they thought of it, they would have transferred, but they didn't through an unintended oversight or the like. Of course, "they" may resist having to deal with it.