company takeover – 401
The company I work for is about to be taken over by another company. Many employees in the company have 401K loans. What is the rule in the case where the company you work for is bought out by another company. The employees are being told loans must be paid back within I believe it is 60 days or they will be taxed. This is causing panic among some of those who have a larger loan. What are the rules concerning 401k loans in the case of a company takeover. Do they become immediately due as if the employee was terminating the employment??
Permalink Submitted by Alan - IRA critic on Fri, 2018-09-28 21:08
There is no specific rule. It depends on the agreement between the two companies regarding the disposition of the entire plan, whether balances and/or loans can be transferred into the new plan, etc. If the old plan balances are not being transferred to the new plan, then a deadline for loan repayment would likely result, and an offset distribution reported on a 1099R for the loan balance. Such a distribution is eligible for rollover, but usually the employee cannot complete such a rollover due to lack of funds.