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jd_7095

options for dealing with 403b outstanding loan if you get laid off

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Hello I just realized I am  stuck (possibly) with my worst scenario with my 403b loan.
I was informed that my job will be discontinued in Aug, so, I panicked. I
had outstanding car loan and other loans and I took a loan to pay off those.
I did not realize the rule about paying back after getting laid off.
What option I have ? I have x4 times money in my 403b left. I have excellent
credit ratings but not sure what it means in current situation.
.With best regards,
 

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I don’t have any personal experience with this. Intuit answered this question for a 401k, which I imagine is very similar to a 403b.

https://ttlc.intuit.com/community/retirement/help/what-happens-if-i-have-a-401-k-loan-but-later-lose-or-quit-my-job/00/25699

If I were you I’d start googling, read the paperwork you presumably signed, and get a hold of the institution you took the loan from to get details on the exact terms. 

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It's not a uniform procedure. It will vary by plan in 403b land but you might be asked to pay it off immediately or you may be paying tax penalties and regular taxes on the amount if not resolved within 30-60-90 days.. If you are stuck in a bad situation that can't be remedied to your satisfaction I would take a  low interest loan at a bank (home equity might work if you own a home)and pay off the 403b loan and then pay off the bank loan as you can. Paying the interest on a regular bank loan might be cheaper than the taxable mess you might be in. Plus with a home equity you can deduct taxes. Your good credit rating would make it easy to get a loan. Don't even think of using a credit card. I would explain your situation to a bank you do business with.  First though read through your plan papers as Ed suggests.

The first thing I tell folks is don't ever use your retirement account as a bank. Its a bad idea. Some folks thing borrowing from yourself is smart but often its better just to get a regular low interest loan to pay off debts or better yet try not to put yourself in the position to have to borrow money. A regular loan from a bank is more straightforward and less complicated.

Dan has this topic covered here close to what I am saying but much more intelligently than I could ever hope to write https://403bwise.com/healthcare/story/279

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JD,

Are you out there? I hope your situation works out for you. Please let us know what you find out and what you plan to do to resolve your issue. Sharing that information here might help others. Hope to hear from you

 

Tony

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