loans and 401k's

[momm2500]

What is the name of your state (only U.S. law)? PA

are there federal laws pertaining to the handling and administration of loans against your 401k? if so, where could I find that information? i want to take a loan but they are telling me that i have to pay the old one off first and i can not take a new one and consolidate the old with the new. I thought that if you have a hardship, it should not matter (hardship could be secondary education, medical bills, foreclosure, etc)

 

[blahbleebloo]

I've always understood that the rules regarding 401(k) loans were established by the investment company and your employer.

I know that the investment company my 401(k) is through has rules about having an oustanding loan that's over a certain percentage of my vested balance.

anyway that probably doesn't help too much regarding federal laws, but I think that the only time the feds really even care is if you've made an actual withdrawal and then they want their cut.

 

[momm2500]

Thanks. i only have a $5,000 loan out there and have 20 yrs invested in the 401k. I just want to take maybe a $10,000 to pay college expenses, but they wont give to me till i pay the original 5 off. just wanting to know the rules!

 

[blahbleebloo]

I would call your investment company and maybe talk to someone in your HR department with your employer. They would have more info I would think.

 

[cbg]

It is by no means unusual (or in any way illegal) for a 401k to limit the number of loans you can have out at any given time. If the plan document says that you have to pay back the first one before you can take out a second one, then you cannot take out a second one until the first one is paid back and the law is not going to force them to let you. In fact, 401k's are HIGHLY regulated and an employer who allowed you to take a second loan in violation of the policy might very well find that the IRS disallowed the plan and would force the employer to close the 401k for everyone.