1099 and loan default

[Guest andmik]

This is an unusual one. Participant dies and has an outstanding loan balance. Account balance is moved to the beneficiary's own acount within the plan, but the loan does not move nor does it default from the participant's account at that time for some unknown reason.

Participant's estate is closed out and all tax filings are complete. Sponsor directs loan to default after the fact. Estate does not want to reopen estate tax filing, so beneficiary wants the records adjusted so that the loan defaults under his SSN and he wants to be responsible for the 1099 and taxation for the loan default.

I cannot find definitive guidance either way from my research. Any insight you might provide will be appreciated.

Andmik