I recently separated from my employer and I had ~$80k account balance and a ~$10k loan. I did a rollover to my new employer at a cost of $60 due to the prior 401k holder. ~$71k made it to the new employer. The loan was entirely paid and there is still ~$9k in the account and I'm confused as to where the funds came from to pay the ~$10k loan balance. I don't understand why I now need to pay $60 more to get the remaining balance that should have come out with the original rollover. I realize there might be multiple issues here.

Why is there still $9k in the account?

Where did the funds come from to pay off the loan since my ~$80k balance was not reduced by the outstanding loan amount?

  • 1
    I suspect the people to ask are the ones running the 401k of your old employer.
    – quid
    Commented May 12, 2017 at 2:17
  • They are not available now and I thought it possible that the loan balance pay off part might be explainable as something like, "yeah that's how it always works--the money got set aside when you originally took the loan as collateral" er something. But I thought I'd ask the community of experts. Commented May 12, 2017 at 2:27
  • Not sure we are "experts". A lot of us just know the right things to google :)
    – Michael
    Commented May 12, 2017 at 2:29
  • 3
    @CaptainClaptrap You're welcome! It stands to reason that if $80k less your loan amount made it to the new program the sum remaining in your old plan is going to be used to pay the loan balance but that part of the process hasn't happened and someone may be waiting on some paperwork from you to allow it. I doubt you could successfully transfer these funds out before the loan balance is paid.
    – quid
    Commented May 12, 2017 at 2:36
  • "They are not available now" It is very rare for companies to manage their own 401(k) plan.
    – RonJohn
    Commented May 12, 2017 at 3:37

2 Answers 2


There are multiple reasons why this may have happened:

1.) I couldn't tell in your question whether or not you had already paid off the loan before requesting the rollover. But if the loan was defaulted - then the $9k left in your account is not distributable, but is there to pay back the remaining balance on your loan. The $9k will be treated as income, and will be taxed - you will receive a 1099-R detailing the taxes you'll owe. I don't know why this wasn't done when they did your rollover distribution. Typically it all happens at the same time - but it can vary depending on the administrator.

2.) Do you get some type of safe harbor discretionary match, or profit sharing contribution? If so - perhaps this contribution was made after your account was liquidated. So now there is residual money in your account and it is treated as a new distribution, which incurs a new $60 distribution fee.

3.) Stock - if some of your investments were in stock - these take a few extra days to liquidate. Typically a TPA/Recordkeeper would wait until ALL of the funds are liquidated before issuing the rollover. But some companies may be shady and do it separately - incurring an additional $60 distribution fee. If this was the case - I would go to your former employer's HR and tell them whats happening and to start looking for a new 401(k) administrator!

I hope this helps :-) Good luck!

  • It was your #3 reason. The stock took longer to process. I had to pay the stupid $60 fee again. There are a lot of things my former employer should be doing differently, but I don't think they are much interested in hearing about them... Commented Jun 22, 2017 at 12:39
  • @CaptainClaptrap i'm sorry :-( they totally should of waited until the entire account was liquidated. Commented Jun 23, 2017 at 14:33

When you leave an employer, 401(k) loans are immediately due (or within 30 days or 60 days). So maybe they are waiting to see if you will pay off your loan. If you wanted to transfer the loan as well, you need to talk to your new 401(k) plan administrator to find out if this even possible. If they say No and you don't pay off the loan, it will count as a premature distribution from your old 401(k) plan and possibly be subject to excise tax in addition to income tax.

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