The IRS did its part to make Friday, April 19th a really good Friday for those who sponsor qualified retirement plans. After not making many friends when it jacked up the user fees for the Voluntary Correction Program (VCP) a year or so ago, the IRS has responded to industry requests (that DWC representatives helped draft) by now allowing plan sponsors to self-correct a number of more common missteps without the need to submit anything to the IRS at all.
Topic Archive: Participant Loans
Plan Loans & Past Participants: What Happens to a Participant's Loan Balance When They Terminate Employment?
We have a participant who took a loan from his 401(k) account at the beginning of the year. Yesterday, he gave us notice of his resignation, effective in two weeks, but he still has an outstanding loan balance.
A participant in our 401(k) plan took out a loan a couple years ago. She could only afford to make the bare minimum payments at the time, but is now in a financial position to pay down the loan more quickly.
We have selected a new recordkeeper for our 401(k) plan. We are told that there will be a period of eight business days when our participants are not able to log in and manage their accounts. We know that we have to provide notice at least 30 days ahead of time to everyone who is affected.
One of the participants in our 401(k) plan just applied for a loan for $25,000. He has enough in his account to support the loan, but there is a bit of a wrinkle. We are planning to reorganize the department he works in, and his position is scheduled to be eliminated in about a month.