Alex Daisy Posted June 5, 2008 Posted June 5, 2008 A participant took out a loan in 2007, and subsequently was terminatated and defaulted on his loan. He did not request a distribution from the Plan yet. How do I reflect this on the 2007 5500? Is the current outstanding loan balance counted in the Plan Assets?
Alex Daisy Posted June 5, 2008 Author Posted June 5, 2008 A participant took out a loan in 2007, and subsequently was terminatated and defaulted on his loan. He did not request a distribution from the Plan yet. How do I reflect this on the 2007 5500? Is the current outstanding loan balance counted in the Plan Assets?
SheilaD Posted June 6, 2008 Posted June 6, 2008 First be sure that the loan actually defaulted in 2007 - was the grace period expired. In whatever year the actual default occurs the participant receives a 1099 coded as a distribution (not a defaulted loan as he is terminated) and for accounting (5500) purposes it counts as a distribution. When he receives the remainder of his account it will be 1099'd and counted as a distribution for 5500 purposes.
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