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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Richard Nehrboss who wrote (2291)9/13/1999 11:58:00 AM
From: Ira Player  Read Replies (1) of 5810
 
Thread,

I have a question about 401(k) programs and was hoping for some quick information.

I have an outstanding loan against my 401(k), have been paying it down with biweekly payments and periodic lump sums when I trade well ((;^)). I recently requested the balance so I could pay it off. When the custodian provided the balance, it appears they didn't credit any of the lump sum payments against the loan, even though the payments were credited to the account as they were made. (Verified on statements)

I will pay the correct amount and not try to take advantage of this error, but my question:

If someone took advantage of this error and eventually was caught, what are the ramifications to the 401(k) plan for the employer? Isn't this allowing excess contributions and possible disqualifying the plan?

I believe the excess contributions and gains from it must be removed from the account, taxes paid, and a 10% penalty for the individual.

Thank you in advance for the information,

Ira
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