401(k) Loan Repayment
Regulations state that a 401(k) loan needs to be paid back within five years while you are working, or within 60 days if you are laid off or quit your job.
Does a severance package effect the determination of the 60 Day period? A client who was effectively laid off on August 31, 2009 was granted a severance package that would be paid bi-weekly thru 1/30/2010. What is the first day of the 60 day time period for loan repayment, September or February 1st ?
Permalink Submitted by Alan Spross on Wed, 2010-02-17 23:39
I believe that the answer would depend on whether the severance plan allowed for deducting the 401k loan from the rollout payments. In that case, the 60 day period would obviously start at the end of the rollout period. Otherwise, it would probably begin on the termination date, but it is best to check with the plan administrator for this determination.