I work in New York City and am 100% vested in my pension plan. I have been with my company for 14 years and am considering leaving their employ next month. I had taken a loan out of my plan in 1997 for $15,000 and so far repaid $10,000 back. When I leave, I would like to withdraw my funds as a lump sum. Is this possible? What effect does the outstanding loan have on this? And, I know that my current employer will take as much time as they want to delay this, is there a time restriction in which they have to file my papers after I tell them I am leaving, and if so,
what is the time restriction and how long does this process usually last? Thanks for all your help in this matter.
I'm not a lawyer, so this is only from the plans I've seen -
I would like to withdraw my funds as a lump sum. Is this possible?
Yes but the IRS imposes a 10% penalty unless the withdrawl is made under certain circumstances.
Here's some info on the tax consequences -
http://www.irs.ustreas.gov/prod/tax_edu/teletax/tc412.html
What effect does the outstanding loan have on this?
Your loan will become due and remaining balance of the loan will be deducted from the lump sump distribution.
is there a time restriction in which they have to file my papers after I tell them I am leaving
You would initiate the withdrawl, so I guess the answer is no.
how long does this process usually last?
Depends on how fast the paperwork is processed.
Usually you apply for the 401(K) termination to the plan provider, the plan provider verifies all your info with the employer and then sends you a check. The last one I saw was 2 weeks from the time the employee returned the paperwork to the plan provider.
The above is very generalized and you would get better answers to these questions from your plan provider or the employee at your company who manages the plan.
Hopefully something in here helps -
wtd
