If I change jobs, what are the ramifications on my 401k loan?

Q: I currently have a loan out on my 401k. If I change jobs what are the ramifications? —Shawn, Lawrence

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: Unfortunately, you will need to immediately repay the loan. Otherwise, it will be treated as a pension distribution for the amount of the outstanding principal of the loan. You would have 60 days from the date of the distribution to come up with the funds and roll them over to either your new employer's pension plan (if they will accept funds from other plans) or to an IRA. If you can arrange for a home equity credit line, you could borrow against that in an amount sufficient to repay the plan for the 401(k) loan, thereby avoiding this issue.