Hey all,So, I am considering (if all goes well with the interview!) a career move... My company is kind of strange in its organization... Essentially, we are multiple separate (distinct) companies, each with its own CEO, etc.. .Yet it is all part of the same 'organization'Sorry to be vague, I just dont want to give too much away on a BB :)At any rate, I believe that the new company uses the same 401k setup that my current employer does. My question is this: if they tell me that I do (in fact) need to roll over my 401k, will I be eligible to take a loan against it once things have settled with the new company?We are thinking about buying a place near the new company (this is a geographic move as well!)... Until we sell our current home, I was thinking about taking a loan out from my 401k to cover down payment, closing costs, etc.I know that borrowing from the 401K is not exactly Foolish, but I still would like to know if there are any rules on borrowing from rolled-over funds?Thanks in advance!K
The answer is, it depends on the terms of your prospective employer's plan. Each plan can set certain parameters around things like loans (subject to restrictions contain in the tax code). Ask. Many plan sponsors allow loans from rollover funds. Some don't. From my perspective, if the plan allows for loans (and not all do), then I see no real disadvantage to the plan sponsor in allowing them from the rollover funds within the plan. Keep in mind that there are restrictions on the amount you may borrow (the lesser of 50% of your balance, or $50,000) and there are time restrictions for pay back (5 years, unless it's for the purchase of principal residence, and then it may be longer - but there may be other restrictions, etc.).
Are you sure that the the 401k plan is actually a different one than that at your current employer?Were you planning on a rollover to the new company's 401k plan or to an IRA? If to an IRA you can definitely not take out a loan against it. If to a new 401k plan it will depend on the provisions of the plan and you would need to check with the employer or whoever administers the plan.Bob
"Are you sure that the the 401k plan is actually a different one than that at your current employer?Were you planning on a rollover to the new company's 401k plan or to an IRA? If to an IRA you can definitely not take out a loan against it. If to a new 401k plan it will depend on the provisions of the plan and you would need to check with the employer or whoever administers the plan."Not sure if its the exact same 401k or not. I know that my 401k doesnt show my employer--- it show the loosely affiliated umbrella entity in the title bar.I would either leave my 401k where it is, or roll it over to the new company... I dont see any case where I would roll it to an IRA
I think you are a little off track. No two 401(k) plans are the same. Each employer gets to design it how they choose - subject only to staying within the bounds of hte tax code and ERISA (labor laws). The two plans may be "recordkept" at the same place (Fidelity, Vanguard, Schwab, etc). - but will still have it's own features based on the employer's choice (subject only to certain recordkeepers have some additional limitations placed on the business they are willing to accept).If the same recordkeeper handles both plans, the transfer may be easier (*may* be, not necessarily so), but even if they aren't the same, the transfer should be pretty painless. ASK you prospective employer if rollovers are accepted, and if so, may loans be taken from the "rollover source."
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