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How do I pay back a loan?
I borrowed money from my 401(k) with the agreement to pay back the loan though future paychecks. The company I worked for uses the third party ADP to handle their 401(k) department. Currently, the company is being bought over by another company, and my current company will no longer be taking the bi-weekly payment out of my checks. The new company said can't take over the loan, since its not their company,or thing to deal with. I contacted ADP and they said that I need to continue paying the whole balance of the loan to my company until December, but then afterwards take a 10%+ penalty fee for any unpaid balance, since I need to go though my company to pay back my loan, which will soon not exist (the company).
I can't pay off the whole loan in 1 payment, which is why the agreement to pay a little per check. The new company won't have anything to do with it. I don't think that is fair. Any thoughts? Suggestions?
no, well the 10%+ penalty would be from the IRS, for taking out money from the 401, instead of keeping it in a tax-shielded account, such as 401 or IRA. It is what would normally happen, if not for the installment type plan that my company (and not the new company) has for a form of paying it back.
1 Answer
- 8 years agoFavorite Answer
It sounds to me like they're unnecessarily giving you the run around. Get a copy of the terms and conditions of the original loan from the original company, and unless there is a clause in those terms and conditions that says:
"If we get bought out and you have not yet paid off the whole balance of the loan, you have to pay a 10% penalty"
Unless there is a clause that says exactly that, tell them to drop the ludicrous penalty or else you're not going to pay the loan back. As soon as you start to threaten not to give them their money, they will be more than willing to work with you, and they will probably drop that penalty very, very quickly.
Good luck!
Source(s): http://wheretoborrowmoney.com/