Loan repayment

[Guest JWR]

I have a 457 plan where the participant has died with an outstanding loan balance. The spouse beneficiary would like to repay the loan balance before distribution. Can they do that? What is the advantage to doing so?

[mbozek]

I have a 457 plan where the participant has died with an outstanding loan balance. The spouse beneficiary would like to repay the loan balance before distribution. Can they do that? What is the advantage to doing so?

Isnt the spouse the owner of the employee's 457 plan account? the advantage is that the employee's estate will not be taxed on the amount of the outstanding loan balance and the spouse can roll over more tax deferred money to an IRA.