Redrooster
Junior Member
What is the name of your state (only U.S. law)? Maryland
Hello. I took out a loan on my 401k plan back in March of 2012 for $40,000. The loan repayment agreement was to have $333.57 payroll deducted for 60 months. The loan repayments were to have begun no later than May 14, 2012. That did not happen. I was notified by the loan administrator that repayment had not begun and that the loan was going to go into default. I repeatedly notified my payroll department that the payroll deduction had not taken place and that the loan was about to go into default. They assured me that this would be taken care of and not to worry about it. The deduction from my pay did not happen until Sept. 2012. Then in March of 2013, the deductions stopped. I was contacted by my payroll department that they wanted to provide me some assistance with the tax and penalty obligation since they realize that this loan went into default because they were not timely in starting the deduction. They are offering an amount of $15,000+ for the estimated taxes and penalties. This all caught me by surprise. I contacted the 401k administrator who confirmed they had not received any payment towards this loan. When I questioned my employer, they asked me whether or not I had received a check for the monies that had been deducted. I informed them that I had not. When I asked where the money had been going, they could not tell me. I am supposed to have a conference call with them on Fri. 4/5 to discuss the plan for resolving this matter. My intent was not for this loan to go into default. My intent was for this money to be re-payed back into my retirement fund. When I stated this to them, they stated that they had gone through a transitional period within the payroll department and the person responsible for handling this had left the position. That still doesn't explain where my payroll deduction was going and why I wasn't notified until now that the loan was in default. Later I found out that apparently the loan went into default back in Aug 2012. What should I do? How should I proceed? How do I get this resolved?
Hello. I took out a loan on my 401k plan back in March of 2012 for $40,000. The loan repayment agreement was to have $333.57 payroll deducted for 60 months. The loan repayments were to have begun no later than May 14, 2012. That did not happen. I was notified by the loan administrator that repayment had not begun and that the loan was going to go into default. I repeatedly notified my payroll department that the payroll deduction had not taken place and that the loan was about to go into default. They assured me that this would be taken care of and not to worry about it. The deduction from my pay did not happen until Sept. 2012. Then in March of 2013, the deductions stopped. I was contacted by my payroll department that they wanted to provide me some assistance with the tax and penalty obligation since they realize that this loan went into default because they were not timely in starting the deduction. They are offering an amount of $15,000+ for the estimated taxes and penalties. This all caught me by surprise. I contacted the 401k administrator who confirmed they had not received any payment towards this loan. When I questioned my employer, they asked me whether or not I had received a check for the monies that had been deducted. I informed them that I had not. When I asked where the money had been going, they could not tell me. I am supposed to have a conference call with them on Fri. 4/5 to discuss the plan for resolving this matter. My intent was not for this loan to go into default. My intent was for this money to be re-payed back into my retirement fund. When I stated this to them, they stated that they had gone through a transitional period within the payroll department and the person responsible for handling this had left the position. That still doesn't explain where my payroll deduction was going and why I wasn't notified until now that the loan was in default. Later I found out that apparently the loan went into default back in Aug 2012. What should I do? How should I proceed? How do I get this resolved?
Last edited:
