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-   -   Loan Payoff at 401k rollover (https://www.askmehelpdesk.com/showthread.php?t=60911)

  • Feb 7, 2007, 09:30 AM
    Jbert
    Loan Payoff at 401k rollover
    NOT HAPPY HERE!

    Here's the deal. Example is for clarity.


    Total 401K is $100,000.00
    Outstanding loan is $15,000.00


    That's it, now I lost my job of 30 years.


    Administrators pay off loan of $15000.00 and rollover $185,000.00 to a IRA. They take or apply nothing to the $15,000.00. No 20% withholding or 10% penalty.

    I assume this would done because the $15000.00 is a cash disbursement to pay the outstanding loan. So thinking they have taken out the appropriate 20%and10%, I plan all other tax planning with that 20% withholding in place.


    Is what they did legal.

    Adding $15000.00 income with no withholding will put my taxes for2006 in a large negative. Not what I planned being on disability now.


    THANKS for your help. All answers will be appreciated


    Jim
  • Feb 8, 2007, 12:07 AM
    AtlantaTaxExpert
    Jim:

    They may have screwed up by not withholding the 20%, but YOU still have to pay the tax.

    Contact the IRS about a payment plan!

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