early payments on a loan

[betheeg]

If a participant has a 5 year loan to be paid back quarterly, can he prepay the year's payments in January? (i.e $250 payment per quarter of 2007 but pays $1000 in January 2007, then doesn't make another payment until January 2008).

[Belgarath]

While I do not believe there is anything in the regulations specifically authorizing this, I would have no problem with it.

[Guest dhall111]

Does your plan allow it? Most plans have specific rules for how/when loans can be repaid.

[J. Bringhurst]

yes...most of the plans that I've seen to not permit partial prepayment...only repayments in full.

[PLAN MAN]

The Code requires level amortization of the loan and payments at least quarterly. See Code section 72(p)(2)©.

"© Requirement of level amortization

Except as provided in regulations, this paragraph shall not apply to any loan unless substantially level amortization of such loan (with payments not less frequently than quarterly) is required over the term of the loan."

If your loan progam allows, a participant can make multiple payments in January, but he must continue making payments at least quarterly throughout the year. I'd suggest a thorough reading of the loan program to see what provisions the plan requires.