"Reasonable time" requirement for principal residence loan

[Medusa]

Is anyone aware of any guidance as to how long a time is "reasonable" for purposes of 72(p)(2)(B)? I have a participant who is applying for a 20 year loan for acquisition of a dwelling unit now that is intended to become the principal residence in 18 months (individual is intending to live there after retiring in 18 months). Is 18 months a "reasonable time"?

[Earl]

not sure where and i will give it some thought, but i swear to god i saw "within 12 months" once as the required move in time.

not much help, i know....

[Earl]

(ii) Exception for home loans. Clause (i) shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant.

even less help. couldn't find what i thought i saw. sorry, should have been quiet.

[Earl]

How about this... 403(B) aspect may be off target, but interesting stuff....

403b Q 11:19 What is a principal-residence loan?

The determination of what is a principal residence follows the rules in Code Section 121. [Treas Reg § 1.72(p)-1, Q&A 5] If an individual has multiple residences, the determination of which one is the principal residence is a facts and circumstances test. Whether loan proceeds are used to acquire a principal residence can depend on whether the proceeds are disbursed directly to a third party for the purchase of the residence or paid to the participant. If the loan proceeds are disbursed directly to a third party for the purchase of the residence, they are considered to have been used to acquire that residence. [Temp Treas Reg § 1.163-8T©(3)] If the loan proceeds are distributed to the participant in cash or deposited into the participant’s account, then the loan is treated as incurred to acquire the residence if expenditures to acquire the residence are made within 90 days before or after the date the loan proceeds are disbursed. [iRS Notice 88-74, 1988-2 CB 385] The refinancing of a principal-residence loan can sometimes be treated as a principal-residence loan if certain tracing requirements are met. Also, debt incurred to acquire the interest of a spouse or former spouse in a residence, when incident to divorce or legal separation, can be treated as debt for the acquisition of the principal residence.