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Leave of Absence Missed Payments Before LOA Cure Period


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This was posted by someone else earlier with no feedback. Have same issue. Interested in comments. Thanks.

If a participant is on an authorized non-military leave of absence from her employer, Q&A-9 of Treasury Regulation Section 1.72(p)-1 provides that her participant loan repayments may be suspended for up to one year.

What if the participant's loan repayments were in arrears prior to the commencement of the leave of absence? Q&A-10 of Treasury Regulation Section 1.72(p)-1 permits a plan administrator to allow for a cure period ending not later than the last day of the calendar quarter following the calendar quarter in which the required installment payment was due.

Does the suspension permitted under Q&A-9 apply in this scenario, which would actually result in the cure period being extended by up to one year? Or is the suspension permitted under Q&A-9 applicable only where the loan was otherwise current when the leave commenced?

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