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I changed jobs about 18 months ago and had a 401k with my previous employer. Problem: I had a 10,000 dollar loan when I left. Unfortunately I did not have then (and do not now) have the 10,000 dollars to repay the loan. The employer and Fidelity told me that the employer would foreclose on the loan and the $10,000 would be repaid with my balance (about $80,000) and an early withdrawl penality would be imposed plus taxes. All of this I understand.

The strange part is that 18 months later the employer has not yet acted on the loan. I would like to rollover the balance to a traditional IRA of which I would have control and possibly improve my return (my current portfolio is in an index fund; Spartan US equity). I have obviously been pleased that the employer has not foreclosed on the loan and I have avoided the penalty.

Question; how long do I suffer from high 401k management fees, average returns and no control to the long-term detriment of my investment? Should I roll it over and take the penalties hit now or continue to wait and see if I can slide another tax year (I assume that at some point they catch up to me and I will have to pay anyway)

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