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Closing company and need to shut down 401 k plan
I have a small company which I will be closing soon and wish to close our existing small business 401k. I currently have a loan against my personal portion of the account. I understand that the loan will need to be paid off when I roll over to an IRA so I will need to take a distribution and pay the penalty and taxes. What is the proper procedure for shutting down the 401k plan? Any specific forma I will need to complete & file?
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Contact the plan admins. They will know how to do it. It will mean that everyone becomes vested and is entitled to a distribution. If anyone has an outstanding loan it will need to be paid BEFORE the plan is terminated. Otherwise it will be considered a withdrawal and subject to penalty. Once the plan is terminated it can't accept any repayments. |
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