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Found 6 results

  1. We have a plan that we just took over as TPA. In reviewing the information it was discovered, that yhere is a loan that was issued 8/2012 that is still showing as active. Does not appear that any loan payments were ever made nor was it ever defaulted. If I am reading Rev Proc 2021-30 correctly, 6.07(3)(d) - it look like i can use the SCP if the participant would pay the loan off in full, plus interest. Am I reading correctly or does this have to be filed through VCP? Thank you!
  2. Question: is the following loan in default or still within a correction period? Participant took a loan in 4th Quarter 2020 and repayments were to commence via payroll withholding, 1st payment late December 2020, 5 Year repayment. Assuming this Participant is a Qualified Individual under CARES, loan repayments could be delayed until January 2021 at which point the loan balance plus interest could be re-amortized for a new 5 years. To date, the Participant has not made any loan repayments. Under this scenario is the cure period June 30 2021, for at least all missed loan payments January 2021 through March 31, 2021? Thank you.
  3. I have a client whose assets are in a brokerage account. The owner took a loan and never made payments. They apparently never intended to and now want it defaulted. I don't have confidence she is going to have a 1099R produced even though she said that's her intention. My question is: What are the ramifications/fixes for a defaulted loan on a brokerage account when a 1099R is not done? We do utilize Penchecks, but that may result in 2 1099Rs. Thank you in advance-
  4. This may be a dumb question, but I can't find a definitive answer on this in primary sources. If a loan has been treated as a deemed distribution (because of missed payments) and the 1099-R issued, can the participant make repayments on the loan beyond the 5-year maximum repayment period? It seems to me that this would be fine because the consequence of violating the maximum repayment period requirement is a deemed distribution, which has already occurred. So, after the deemed distribution, repayments beyond the 5-year period have no consequence. Does that seem right? The only example given in the regulations involves repayments within the 5-year period, so it doesn't really address this question. Any thoughts are appreciated.
  5. So the plan contact had an outstanding loan that he received a 1099R for in January from American Funds, as he was not making loan repayments. Apparently (he says) when the plan moved over to my new employer and to a new carrier (AF), "somehow the loan repayments for me stopped" and for another person he mentioned. He wants to know if he can start repaying the loan. My answer would be no, since he received the 1099 already and the info was submitted to the gov't back in February; I don't think there is a way to "undo" the default...or is there?
  6. We just inherited a plan with an outstanding loan by the officer of the company. The participant made one payment in 2011 and has not made a payment since; the prior TPA has not issued a 1099R. We asked around at a few pension meetings and someone mentioned the possibility that the transaction could be handled as follows: participant taxable in 2011 on the missed payments due in 2011 participant taxable in 2012 on the missed payments due in 2012 participant taxable in 2013 on the missed payments due in 2013. Therefore, there would be 1099Rs in 2011-2013 only for the missed payments and these would be a code "1". The participant has every intention of starting to repay the loan with the next quarterly installment. This is a most interesting take on the situation and would appreciate any comments.
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