Guest Rosalind Posted May 25, 2004 Posted May 25, 2004 A loan agreement provides that upon termination of employment, the balance of an outstanding loan will be offset. After the offset, if the participant's remaining account balance is $5,000 or less, can this remaining amount be cashed out? The answer could be "Yes", because the look-back rule for determining cashouts is gone. Do the offset in May and then pay the cashout in June. The answer could be "No" because under Reg. 1.72(p)-1, Q&A-13(b), an offset is an actual distribution for purposes of the Internal Revenue Code. If that is the case, then the participant can't be forced to take out a distribution which is less than $5,000. Any thoughts (please!!) on which is the correct answer?
FundeK Posted July 26, 2004 Posted July 26, 2004 Check out Q39 of this link http://w3.abanet.org/jceb/2004/qa04irs.pdf
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now