tennesseeflyboy

Any one have a good or bad experience in getting money from Vanguard as a loan against 401k ? Heard that a loan was requested but it ended up being disbursed as a withdraw , in which case the monies immediately become income and therefore taxable with penalties ............ If Vanguard screwed up the process , is there any recourse .....???

Maddawg71

I did it and had no problems. It is very cut and dry on the Vanguard website and fairly easy to do.

av8rmike

Ditto. Very easy and payback over up to a 10 yr period.

md11phlyer

Did it, repaid over 2 years. Easy as pie and payroll deducted the payments (to myself). Got a check back at the end for a slight overpayment. The customer service throughout the process was A+.

Methinks you fat fingered something if you're having trouble.

skypine27

Google 401K hardship withdrawal. That's an option too if you meet one of the parameters (there are 6).

I went that route. Better than a loan IMO.

However, be prepared that about 6 months to a year afterward, you will be "audited" by Vanguard (not the IRS) when they will ask for supporting documentation for the hardship reason you stated initially. You don't have to provide any docs initially, and simply just have to tell them which of the 6 parameters you meet then the check is cut. But about 6 months later Vanguard asked me for "proof" of the hardship condition.

tennesseeflyboy

Ok appreciate the feedback .......... Question : Other than hardship withdraw , is it possible to still get a withdraw under different circumstances ? When you make a withdraw , there should be taxes and other penalties , does Vanguard advise of this either in writing or some other form of acknowledgement ??? Appreciate any other information ........

MD11Fr8Dog

There's a Difference bewteen withdrawal and borrowing from your 401k. No tax hit lending to yourself. All the info is on the Vanguard site. Search it read it, click all the buttons for various options up to the final send button and see what your options are. Still have Qs, call Vanguard.

Jetjok

I just got off the phone with Vanguard, because I suspected how or what would happen, if someone was indeed audited and found to have not told the truth about their 401K hardship withdrawal. Here's what they told me: 1) there are 6 situations that will allow for a hardship withdrawal (look them up on the IRS website); 2) Vanguard will indeed take your (initial) word for which situation you have; 3) However, Vanguard, the IRS, or FedEx can audit you after you've taken the money; 4) All's cool if you can prove your hardship, however; 4) if you can't prove the hardship, ie you didn't tell the truth, and you are being audited by Vanguard, they will notify FedEx and the IRS; 5) who knows what FedEx will do; 6) the IRS will charge you penalty and interest for the early withdrawal, and (this is just my guess) you will be on their automatic audit list for some number of years to come. Sort of like double secret probation.

Personally, I'd opt for the straightforward loan, and pay it back at my convenience, through payroll deduction, that way, at the end of your career, you'll have all the monies you'd ever put into the 401K available to you, rather than having something less. And of course, hopefully your account has grown significantly over the years.

TFB (tennesseeflyboy), as for your initial question, I'd suggest that you have the person who had this situation contact Vanguard and ask them to review their phone or computer records, to determine what exactly was entered or said. They have the ability to reconstruct those events, and I'd hope and suspect that if it were their fault, they would rectify the situation.

JJ

Bamaboy

I just got off the phone with the Vanguard rep. She said that I can only take a loan on the portion of my account that I personally contributed (Savings Plan), that the larger portion that FDX contributed (B Fund) is not available for loans... Makes sense, but is that what you guys heard?

Maddawg71

That's correct. The Vanguard website will only allow you to take out a loan on the money you have already contributed.