What to do about a delay in providing a loan against a 401K?
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What to do about a delay in providing a loan against a 401K?
Due to some confusion between my employer and the 401K provider, I had 2 accounts under 401K so 1 account had amount acculmulated until 3 years ago and other had after that. Now when I needed a loan against my 401 K as per the rules I was allowed 50 % of account value. The issue here as per 401 provider was they did not get proper info my employer to merge accounts and they were allowing 50% of the second account (more recent account) only. It took almost a month to resolve this but due to delay I had to arrange money from somewhere else. Now would it make a case for the delay in service?
Asked on July 19, 2012 under Employment Labor Law, Wisconsin
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The case is not one wherein you will win a lot of money. You were not completely injured. If you had to arrange for monies elsewhere, calculate how much you will owe in interest that you would not owe if you had obtained the 401k monies and contact the plan provider, explain what occurred and explain you expect a refund of that amount.
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
I would let the matter lie in that an argument could be made that you are somewhat responsible for not making sure that your two 401 k accounts were merged into one account years ago. You need to realize that the trustee under the 401 k account cannot make sure that all is in perfect order in handling such.
You could make a case for some damages caused by the delay as to the trustee, but some fault could be placed on you for not making sure that the accounts were merged together well before you needed the loan.
The trustee's job is to make sure that the money is properly held and not taken for a wrongful purpose by a third party while keeping the owner of the account informed on at least a quarterly basis. For further questions, I suggest that you consult with an attorney experienced in investment law.
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