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This was cleared up in Notice 2020-50. You get to extend the amortization period by a maximum of one year, regardless of how long payments are suspended. For OPs example, the latest extended due date is 8/30/2026 8/31/2026.

You're welcome.

8/30/2026, not 8/31/26? 8/31/26, not 8/30/26? I think the argument for 12/31/2025 as opposed to 8/30 or 8/31/2026 is perhaps that because this is a loan taken out during the CARES Act suspension period, no payment was actually due until 2021, and thus there was never a payment due during the March 27, 2020 - December 31, 2020 to get the add-on 1 year suspension. Is that what Congress intended in the legislation or IRS in 2020-50? Probably not.

Converting to a C-Corp. is the way to get the 1042 treatment. There are occasionally bills to extend this to passthrough entities, but currently only C-Corps. can get 1042 treatment. Just be sure it's worthwhile and get good advice.

This is correct. You set up the loan payment dates as normal. In this example, if the loan is taken on 9/1/2020, the original 5 year payoff date would be 8/31/2025. The first loan payment can be delayed until 1/1/2021. The loan interest from 9/1/2020 to 12/31/2020 is calculated and added to the loan balance. The total loan balance (including interest) is then re-amortized to a payoff date that is one year past the original payoff date (8/31/2025 plus one year is 8/31/2026).

Dave, has anyone in the history of Benefitslink ever had more likes than posts besides Derrin?

12/31/2025 would be my vote.

OK, Austin! And you should call me "PNJ"!! Our very best 403(b) administrator, who has several of these plans, just returned my call. She said that they just dropped the Participant count and did not change the asset number. She acknowledged that this is not quite what the FAB's say but told me that they have never had a problem with doing it this way. They have not had an IRS/DOL audit on any of these plans but have not received any inquiries regarding the 5500's as filed. Hope this helps! PNJ

At the risk of "being picky", with an extended due date of January 1, 2021, the "mailbox rule" is often used as proof of compliance with a statutory or regulatory due date: having a postmark by the date (there might be exceptions). There are no January 1 postmarks. If it were me advising a plan sponsor, I would point out the value of a 12/31/2020 postmark or wire transfer.

Thank you all--appreciate the input.

I don't see a 409A problem with different payout amounts for different events, and even for the same event (separation from service). You see this in SERPs sometime, where one amount is paid for voluntary resignation and a higher amount is paid for termination without cause.