Post 13 confirmation: 401(k) loan administrator treating loan as an early withdrawal and won't accept trustee's distribu

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The Ninth Circuit says in In Re Egebjerg that 401(k) loans are not debts and the administrator of the 401(k) loan is not a creditor. Ninth Circuit says debtor borrowed money from himself. Internal revenue code and the plan rules are going to govern. If loan payment was more than 90 days in default internal Revenue Code forces the administrator's hand to call it early withdrawal. Debtor obviously did not have a plan that required mandatory payroll withdrawals, which of course do not violate the stay under 363(b)(19). Debtor should have paid 401(k) loan outside the plan.
Mark Jessee
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> On Feb 1, 2016, at 2:42 PM, Daniela Romero dromerolaw@gmail.com [cdcbaa] wrote:
>
> Debtor's chapter 13 plan includes repayment of a 401(k) loan. No objection by the 401(k) loan administrator and plan was confirmed.
>
> Postconfirmation, the 401(k) loan administrator forwarded the chapter 13 trustee's distribution check to the debtor and advised him that they decided to treat his outstanding loan balance as an early withdrawal from his 401(k). The 401(k) loan balance is approximately $3,000.00.
>
> Stay violation? Best way to handle this?
>
> Sincerely,
>
>
> Daniela P. Romero
> Law Offices of Daniela Romero, APLC
> 1015 North Lake Ave., Ste. 212
> Pasadena, CA 91104
> Tel: (626) 817-2611
> Fax: (626) 296-6991
> email: dromerolaw@gmail.com
> web: www.pasadenabankruptcylaw.com
>
Sincerely,Daniela P. Romero
Law Offices of Daniela Romero, APLC1015 North Lake Ave., Ste. 212Pasadena, CA 91104Tel: Fax: (626) 296-6991email: web: www.pasadenabankru
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