Work in Finance and was let go today.
I have an outstanding loan against my 401k. Will i be allowed to pay it back monthly?
9 replies (most recent on top)
@cz, your medical doesn't change other than they stop the HSA contribution. You still have insurance and it's still deducted from your sub pay. But you can still contribute to an HSA on your own although you should switch to a plan with no fees such as Fidelity.
Frayman? Come on dude. That was like when Pterosaurs were still flying around. Is Jim even alive anymore?
Heard that Frayman left the Bank to replace Newman on Seinfeld.
I see someone's comment said that under the sub pay you don't pay fica tax as sub is considered a benefit, this is was aware of. But no medical?
Do you not receive medical insurance during sub pay period?
Did you get your separation doc yet? This was in mine when I was canned during the height of covid:
Any outstanding 401K loan payments will continue during the SUB period. When your SUB period is over, you must call the vendor to arrange continuing loan payments, if applicable. For additional guidance and questions, please call 1-877-269-8758.
Sorry that you lost your job and I know how it feels because I was let go in November 2023 in Pittsburgh. It took me a year to find a job. I know it feels overwhelming figuring out your situation after the separation email is dumped on you, and it’s a difficult time in anyone’s life. It hit me personally very hard. But the good news is that after the initial shock you realize that it’s not the end of the world and you have so many options. For your 401k Voya will contact you regarding your 401 account that you’re no longer an employee and depending on how much your balance is you may have the option to stay in the plan if your account is vested for a small annual fee and you should discuss your options with Voya regarding your loan options. I know it’s tough a time being laid off but so many people are willing to help and advise you, and so seek advice on your loan situation. A lot of knowledgeable friends and tax advisors may give you free advice or for a small fee knowing your tough situation, and you should ask them about your 401k loan options. Finally, depending on your years of employment at BNY, RIF layoff very likely qualifies you for both the SUB and your state UE, and you will realize that your income will go up during this period when you’re collecting both. The SUB payment alone is a little more than your regular salary because it’s considered a benefit, not a wage, and it’s not subject to federal social security and medicare deductions, but it’s still subject to federal income tax deduction based on your W4. No state UE deduction, but you are still subject to state income taxes if your state has an income tax. My point is that depending on your situation you could be in a good financial situation for some time, and you should discuss your options with Voya and your tax advisor. But my advice to you is to find A job asap because I don’t want anyone to think that it’s a fun vacation to collect SUB and UE. It’s NOT! Keep in mind that state UE has a work search requirement and you have to document your searches and very likely to meet with state department of labor counselors, so it’s not like you’re free but if you are honest and actively looking for a job at least matching your previous role and salary, you should be fine. Being involuntarily let go is tough but you will find support everywhere and even state UE staff offer you sympathy and support as long as you are honest. Good luck
You have two choices:
1 - Make monthly payments to your 401k at Voya. But you won't be able to move that money to other 401k company until the loan is paid off
2 - Don't pay the loan off, and the IRS will consider that taxable income for the 2024FY, and you will pay tax on that next year when Voya sends you a 1099-ish form.
I believe you can still make bi-monthly payments per your loan agreement. I used to think it had to be paid off if you ever left the bank.
Pls check the page #23 from this link
https://my.voya.com/einfo/pdfs/forms/bnymel/350011/BNY_MELLON_401K_SPD-JULY_2021_FINAL.pdf