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Primary Residential Loans


Safeharbor29

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Hello, what is the consequence if a plan did not obtain the supporting documentation to prove the loan from the 401k or 403b plan was for the purchase of a primary residence? Is self-correction available? Are there penalties/or filings assessed?

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If it is lack of documentation, the correction is simply to get the documentation and retain it. I guess you could call that self correction.

If it is that the proceeds were not used for primary residence, the correction is available through VCP. Either through re-amortization over no more than 5 years from the original loan or through loan default for violation of 72(p) if outside the 5 year window from the original loan.

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  • 2 years later...

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