A word of warning to anyone that hasn't gotten laid off yet, if you have a 401k loan outstanding, be aware it will be due in full upon the termination date. Just got a call from Schwab telling me that my 30k loan is due in full immediately and that I'm not able to continue paying monthly payments instead to keep it going.
So now my choices are take a huge chunk out of my lump sum or take a big tax hit next year. Got a really love this company ♥️♥️♥️
Why would you ever take a 401k loan to begin with? I personally knew someone who was in the same situation in 2010. Hopefully you will learn to take fine print seriously.
This is spelled out in the terms of every 401K loan. They're risky. Don't do it if you're not in dire need of the money.
Taking a 401k loan is a bad financial decision, maybe cut back on the spending.
Everyone should have the experience once in their life so they can see first hand how they impact people’s lives.
I fully understand the sentiment. I read a stat that ~50% of employees will experience a layoff sometime in their career. This is my second "opportunity" to experience this gift. I had coffee with another ex-Schwab who's third time around. The predictions are that layoffs will only become more frequent in the future. Sigh.
Layoffs are the gifts that keep on giving. Everyone should have the experience once in their life so they can see first hand how they impact people’s lives. If you have not experienced it you have NO idea thus the many of the ignorant comments on here like “you’re lucky” “you got the severance” blah blah blah. Yah walk in our shoes.
I had a 401k loan with a previous employer which I left voluntarily and had to re-pay. I am not familiar with Schwab's 401k loans (Ts&Cs), but the loan structure is likely similar (?). A 401k loan is secured by your 401k balance with a loan amount of up to 50% of your vested 401k account balance. When you terminate (either voluntarily or via layoff), the loan balance is due and payable. You usually have a couple of options to repay: 1) take an early distribution from your 401k to repay the loan, or 2) repay the loan directly to the plan administrator using your own funds. Option #1 is easier financially, but the catch is the distribution will be taxable and may include IRS penalties (up to 10%). Yikes! You should find/read the loan agreement to understand what to do. There is some leeway until your tax filing date to figure it out, and you will need to continue making payments (somehow manually?). Hope you find an acceptable path forward. (These are my own thoughts.)
Not to sound like a jerk but that requirement was spelled out pretty clearly in our severance paperwork. Sorry that it’s impacting u negatively though.