How Many Errors Can YOU Spot?

[jomeara73]

Do we really want to get into a debate of the intricacies of 401k plans?


2) Maximum # of loans: Last I checked, 401k plans only allow 1 type of loan at a time - personal and residential and a maximum total outstanding loan of $50,000. So, if we're going to compare liquidity provisions... let's be sure we get it ALL out of the table. You'd have to have no current outstanding personal loan in order to obtain a new maximum loan. Don't get smaller loans, unless you can repay it and then obtain a higher loan amount.

Just a point of clarification, there is no rule about one loan at a a time. An individual plan document may choose to limit the amount of loans but I have encountered many that don't. The link below to the IRS website mentions rules about multiple loans from a plan. If the plan does allow multiple loans, the max you can borrow on a new loan is basically the maximum loan amount allowable given your account balance minus the highest balance on the loan for the last 12 months minus what you owe at the time of the new loan. If you are taking out, and paying back, multiple small loans this may not matter but if the plan is to borrow the max, pay it back and then borrow again within a year you may have issues.

*apparently I do not have enough posts to link to outside websites. Google "irs retirement plans: loan limits apply to all plans" for the page

 

[scagnt83]

Just a point of clarification, there is no rule about one loan at a a time. An individual plan document may choose to limit the amount of loans but I have encountered many that don't. The link below to the IRS website mentions rules about multiple loans from a plan. If the plan does allow multiple loans, the max you can borrow on a new loan is basically the maximum loan amount allowable given your account balance minus the highest balance on the loan for the last 12 months minus what you owe at the time of the new loan. If you are taking out, and paying back, multiple small loans this may not matter but if the plan is to borrow the max, pay it back and then borrow again within a year you may have issues.

*apparently I do not have enough posts to link to outside websites. Google "irs retirement plans: loan limits apply to all plans" for the page

Interesting. Here is a link. It is under item 3. (not sure if this is the page you tried to link to but it confirms your statement)
Retirement Plans FAQs regarding Loans

Personally I do not think I have encountered a plan that allows for multiple Loans... but that is not something I am usually looking for within the plan documents. And of course the administrator is the one who handles all of that on a change over.
I am just getting back into the 401k world this year so it is very possible I will see a plan with multiple loans soon enough.

Good stuff. Welcome to the forum.

 

[SafeMoney3]

wow. That's not too much