401K / 401K IRS rules on 401K unfair and nonsense
Under the IRS policy a borrower who pays off $49000 loan from 401K cannot borrow back within 12 months, even cannot borrow back a lesser a mount of $5, 000 in next month. This rule does not make sense and is absolutely unfair that cause our society unrest. It is too complex, goes beyond normal mind, and discourages people to pay off their loan. I believe many people suffered by this trap. I want to file a complaint on this policy and alert to other citizen. My complaint is based on the answer from my 401K adminitrator: "Thank you for contacting ING Institutional Plan Services, LLC. The maximum loan amount is the lesser of the following: * $50, 000 reduced by your highest outstanding loan balance from all sponsored plans (including defaulted loans) in the past 12 months over the current outstanding loan balance (including defaulted loans) * 50% of your total vested account balance less the current outstanding loan balance including defaulted loans The loans that you have paid off in the past 12 months will affect your loan availability. The IRS only permits you to borrow $50, 000 in a 12 month period. If you have had loans in the past 12 months, it will affect your loan availability, even if those loans are paid off. The Plan will verify all of your loan's highest outstanding loan balances in the past 12 months (even if the loans are paid off) to calculate the amount that you have available to borrow. .. "