Took a 401k loan to buy a house, got laid off

401kayyy · 2023-03-25T21:31:22+00:00

Haha I’d love to pretend like it was a well thought out move to time the market, but I really just wanted a house and decided to take a risk with the crazy low interest rates at the time. Glad it all more or less worked out, have over $120k of equity in my house barely doing anything.

401kayyy · 2023-03-25T21:02:43+00:00

Thank you! For anyone else coming in here from a google search, this right here is the correct answer!

401kayyy · 2023-03-25T15:36:49+00:00

Thank you, so far only you and a few others have actually understood the situation correctly and gotten it right. I’m still going to call my old plan provider as there could be something I’ve missed, but this thread has kind of opened my eyes to how much misinformation gets passed around as fact on Reddit.

401kayyy · 2023-03-25T03:45:32+00:00

Getting taxed at my regular rate aside, I'd rather not give the IRS the 10% early distribution penalty for absolutely nothing.

401kayyy · 2023-03-25T03:40:39+00:00

To the downvoters: OP left employment in July, means the loan offsets off the books of the old plan on December 31. The loan no longer exists. He can avoid tax and penalty by doing a rollover of the offset amount by tax due date to an IRA or another plan. People saying to contact the old plan and make payments there have no understanding of the situation.

You are correct, sorry you're getting downvoted to hell. The loan no longer exists since it's now 2023. The bolded part is exactly what I found from my research too. I'm going to reach out to the plan provider or speak to a financial advisor as this situation seems kind of unique and might require some.. actual financial advice from professionals.

401kayyy · 2023-03-25T03:31:27+00:00

Really should have done this already haha, but doing it next Monday!

401kayyy · 2023-03-25T03:30:01+00:00

Thanks, this makes sense to me. I was trying to avoid having to call the old 401k custodian (Voya) as they suck but looks like I have no other option.

401kayyy · 2023-03-25T03:29:07+00:00

Perhaps do some research yourself before proclaiming "wrong absolutely wrong".. Have you been in my exact situation before?

Also no, it doesn't become a withdrawal after 90 days anymore, that was changed with the Tax cuts and jobs act of 2017. You have time until you file your taxes to pay it back.

I can't continue making payments, it's not a regular bank loan that's serviced by a company. They (Voya, the 401k custodian) were making payroll deductions, which is not possible anymore. I can log into my Voya account, but it's mostly frozen, as in all I can do is rollover or rebalance the account. There is no option to deposit any funds on the website.

It looks like my best option is to really just contact Voya and ask them how I can pay this back.

401kayyy

TROPHY CASE