MBCarey Posted June 20, 2003 Posted June 20, 2003 Should Employee Loans be added in as inservice distributions for Top Heavy Calculations?
Belgarath Posted June 20, 2003 Posted June 20, 2003 No. A bona fide participant loan that satisfies the loan requirements is not a distribution - hence, you wouldn't add it back in.
g8r Posted June 20, 2003 Posted June 20, 2003 Just to clarify, there is nothing to add back in because it was never taken out. Cash was taken out of the plan to make the loan, but the plan received a note with a FMV equal to the loan. Thus, the plan has not had an increase or decrease in the value of the assets just because a loan was made. However, if there is a default on the loan and there has been an offset of the loan from the participant's account, then it would be considered an in-service distribution and would need to be added back.
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