Need advice regarding a rollover....

[MoonShadow]

I've started to believe that the call center agents at Fidelity are morons.  Please tell me if I can do this.

I have two 401k's, both at Fidelity.  I wish to rollover $45K of a $95 balance from the old 401k into the new 401k.  The old 401k has an outstanding loan.  I wish to take a loan from the new 401k out of that newly transferred $45K to pay off the old 401k loan of $22K.  Afterwards I wish to rollover the remainder of the old 401k.

Can I do this without tax liabilities or defaulting on the old loans?  I've had agents tell me I can do it this way, and that I can't do it this way, and then some moron interpreted this as a $45K early withdrawal, so now there is a 'pending' withdrawal showing on my old 401k account with 20% withheld.

[NoStacheOhio]

My understanding is that loans are supposed to be paid at separation, otherwise the remaining balance is treated as an early withdrawal. This should've been in your paperwork when you set up the loan. I don't think you can do what you're proposing, since it would involve closing the old 401k before the loan is paid off.

[MoonShadow]

My understanding is that loans are supposed to be paid at separation, otherwise the remaining balance is treated as an early withdrawal. This should've been in your paperwork when you set up the loan. I don't think you can do what you're proposing, since it would involve closing the old 401k before the loan is paid off.

I'm not closing the old 401k until after I've paid off the loan, as there will still be $50K+ in it after this rollover; & my old 401k had existing arrangements for a separation that involves the loan re-amortizing and the  payment continuing, so no risk of a lump sum payment or default condition simply due to an amiable separation.  I called them again this morning, and they have fixed the screw up.  The withdrawal was cancelled and replaced by a direct rollover.  And I have verified with Fidelity that I can do what I intend to do without negative consequences.