401(k) Plan Loan Repayment After Separating from Service
Is someone able to defer 401(k) loan payments under the CARES Act, if provisioned by the plan, after separating from service? Everything I’ve read mentions active participants, but I haven’t seen anything discussing an employee who has resigned or is terminated.
Permalink Submitted by Alan - IRA critic on Thu, 2020-05-21 23:27
What is the date of separation? And was the loan current on that date?
Permalink Submitted by Julie Bates on Fri, 2020-05-22 12:22
Hi Alan,The date of separation was April 30, 2020. The loan was current and not in default. The client was making monthly payments on the loan and was in good standing.
Permalink Submitted by Alan - IRA critic on Fri, 2020-05-22 17:20
It appears that the CARES Act allows loan payment deferral, so should be OK if the plan also allows it. If the employee was laid off (not furlough or LOA), good chance any loan offset distribution would be a CRD eligible for 3 year re payment.
Permalink Submitted by Julie Bates on Wed, 2020-05-27 12:38
Thanks, Alan!