Is it possible to offset 401k loan/distribution fees with rollover from a pension plan?

The the lump sum amount they are paying you is nonqualifed and is sent to you in a check which you deposit into your checking account you can use this money to pay the loan back before you transfer your 401K. You have 60 days to transfer your 401K so pay the loan off and once the loan is paid off then transfer your 401k. If you don't pay the loan off the amount you owe will become taxed as income the year you transfer the money and if you are not 59 1/2 you will be charged 10% from the government on the amount of the loan in the year the money was transferred.It would pay to pay the loan off before you transfer the money if you are not 59 1/2.

No, you can not offset a 401(k) loan with a rollover from a pension plan. Pension dollars are before tax dollars. You have to satisfy the loan with after tax dollars.1.

The lump sum payment from your pension plan is qualified money and should not be deposited in your checking account unless you want to pay the income tax on the distribution and the 10% penalty if you are under age 59 1/2. This money should be deposited into an IRA. The pension check should be made out to the IRA custodian, (bank, investment company, etc., for example, "Fidelity, FBO: your name.

")2. You will have 60 days to deposit the check before it becomes a distribution.3. You do not have to transfer your 401(k) if you don't want to.

If you do transfer your 401(k) to an IRA, do an direct transfer. This way you do not have to worry about the 60 day rule. Plus, if you take the 401(k) in the form of a check to open a rollover IRA, there is an automatic 20% income tax withholding.3.

You should pay of the the loan with non-qualified money. If you don't have the money to pay of the loan, then you should take the $4,000 as a distribution, because if you make a withdrawal from the pension money to pay the loan, you will have to pay income tax on the $4,000 plus a 10% penalty if you are under age 59 1/2. This is the exact same thing that will happen if you don't pay the loan.

In 60 days you will have to pay income tax and early withdrawal penalty. I don't know your age, but you are fortunate to be able to receive defined benefit money (pension plan) before age 65. Most companies will not release pension dollars until the employee or former employee is 65.

In any event, pension dollars are treated just like IRA and 401(k) dollars. They are all before tax dollars..

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