I am sorry for your loss. Your company retirement plan has a plan document with specific loan provisions that often put limitation on how often and how many loans an employee can take at one time. It seems that your plan has the typical one loan limitation. However, I do have a possible solution. It is highly likely that your plan does allow withdrawals under a hardship withdrawal provision. This provision allows active employees to withdraw money from their 401k plan for immediate and heavy financial need for the following reasons: Funeral expenses, unreimbursed medical expenses for you and immediate family, purchase of a primary residence, payments to avoid eviction or foreclosure from your home, and expenses for the repair of your home from a sudden and unexpected event such as an earthquake. Now realize that although you can withdraw this money, it will be at a cost. First, your total withdrawal will be subject to ordinary income taxes and if you have not yet attained age 59 1/2, you will be subject to an additional 10% early withdrawal penalty. You will also not be permitted to contribute to the plan for a period of 6 months. You are also limited to withdrawing amounts only to cover the immediate need and taht is after you have exhausted your loan option. This is not an ideal scenario, but if you are in a financial bind this can be a viable option. Check with your employer to confirm that Hardship Withdrawals are permited in your plan. I wish you well.
I am sorry for your loss. Unfortunately, the plan document outlines the rules for loans and may only allow for one loan at a time. I would request a Summary Plan Description to find out what the loan and distribution provisions are for the plan.
Please accept my condolences for your family's loss. Losing a loved one and having to deal with the stress of making sense of a new financial reality and these challenges is difficult, to say the least.
I am not sure that the hardship withdrawal is an option. Though allowed by law, your plan may not offer it. And there are limited reasons that would meet the legal definition. And even if it does meet the requirements, all this will allow is the waiver of the need to repay the amount. You will still need to pay income taxes (federal and state) as well as the 10% early withdrawal penalty if you are under age 59 1/2 on the distribution. Another issue to consider is the longer range impact on your retirement.
Check with your Human Resources department if you're not sure if your plan allows hardship withdrawal.
The IRS code guidelines are pretty strict. Hardship withdrawals may be allowed only if: (1) the withdrawal is due to an immediate and heavy financial need; (2) the withdrawal must be necessary to satisfy that need (i.e. you have no other funds or way to meet the need); (3) the withdrawal must not exceed the amount needed by you; (4) you must have first obtained all distribution or nontaxable loans available under the 401k plan (which you have in your case); and (5) you can't contribute to the 401k plan for six months following the withdrawal.
Acceptable reasons for a hardship withdrawal include:
1.) Un-reimbursed medical expenses for you, your spouse, or dependents. 2.) Purchase of an employee's principal residence. 3.) Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your dependents, or children who are no longer dependents. 4.) Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence. 5.) For funeral expenses. (But in your case this was covered by the 401k loan). 6.) Certain expenses for the repair of damage to the employee's principal residence.
Unfortunately your company plan dictates how many loans you are allowed to take out at any one time. Most plans only allow one loan at a time. You could look at taking a hardship distribution from the plan but that would not be a loan.