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Can You Rollover A 403(b) Loan To A 401(k)? Same Company

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A 30 participant 403(b) is terminating their plan and they have a 401k. the 401(k) allows for rollovers and loans. I am of the opinion the participant CAN rollover their loan balance as long as it doesn't substantially change the terms of the loan. What if the participant also has a loan balance in their 401(k). The 403(b) loan is not treated as a new loan is it?

 

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A 30 participant 403(b) is terminating their plan and they have a 401k. the 401(k) allows for rollovers and loans. I am of the opinion the participant CAN rollover their loan balance as long as it doesn't substantially change the terms of the loan. What if the participant also has a loan balance in their 401(k). The 403(b) loan is not treated as a new loan is it?

 

 

IRS reg 1.401(a)(31)-1 Q/A 16 permits a direct rollover of a loan note from the trustee of one qualified plan to another if the receiving plan accepts a loan note and the terms of the note are not changed materially (e.g., ok to change the name of the holder of the note). Under the EGTRRA amendments plan assets can be directly rolled over between 403b and qualified plans. You need to check with the plan administrator of the 401k plan to see if they will accept a rollover of an outstanding loan note from a 403b plan and allow the participant to continue loan repayments to the plan under the same terms as provided in the 403b note. There may be issues if the 403b plan loan is with an insurance company which may require repayment of the loan to insurer upon termination/transfer of assets in the annuity.

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