Is it best to rollover a 401k to another 401k if you have an outstanding loan, or should I look into other options?

You can not roll a 401(k) to another 401(k) unless you are no longer working for the employer that has the 401(k) with the loan. And, the new employer's 401(k) program has to allow 401(k) rollovers. Some do not.In any event, rolling the 401(k) does not eliminate the loan.

Once you have separated from your employer, you have 60 days to pay off the loan or it turns into a distribution subject to income tax and if you are under age 59 1/2 a 10% penalty for early withdrawal. There is no way to eliminate the loan. You either pay off the loan under the terms of your 401(k) plan, (usually five years,) or have it turn into a distribution.

If you have retired, been laid off, quit, or terminated, you are allowed to roll the 401(k) into an IRA, but that does not eliminate the loan. Again you either have to pay it off or it turns into a distribution subject to tax and penalty.

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