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Loan - Deemed Distribution


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Guest InfoSeeker
Posted

Have a participant that is out of work receiving pay from Worker's Comp. He has not been making the weekly loan repayments. My reading indicates the only reasons for not making repayments are Military Service or a Non-Paid Leave of Absence.

Does this guy have to make repayments? Is he risking the loan becoming taxable via a deemed distribution?

Guest InfoSeeker
Posted

He is not being paid through the employer's system. The employer has no direct way to continue the repayments.

Posted

If receiving workers comp isn't this person on some kind of medical leave? Medical leave allows for suspension of payments for up to one year.

JanetM CPA, MBA

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