Legal Question in Tax Law in North Carolina
why is that when take a loan from you`re 401k and as you are paying it back while working at you`re job and then the plant shut down and then the bank goes in you`re and takes what evre the amount of the loan that you still owe takes the money out of you`re 401k which is supose to be a loan then the I R S hits you with a tax bill if this is the case then all loans should be taxed ,,,but i am just a poor man
1 Answer from Attorneys
You should dig in deeper to this...this doesn't sound right. Typically, if you have a loan when the company goes out of business or employment is terminated, the 401k loan becomes a withdrawal as you no longer have the ability to pay it back. Then the unpaid portion becomes taxable as a withdrawal. I don't understand what you mean in terms of someone taking it.
If you have a remaining amount int he 401k, you need to roll it over into another retirement account. The alternative, is that you can keep the money, but it will be taxed.
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