Guest KPong Posted December 17, 2012 Posted December 17, 2012 My client went from an over million in assets to about $100,000 due to economy and had to laid off all employees in 2011. The owner also has an outstanding loan. When everyone was laid off, she stop receiving a paycheck from the company, thus has not made loan repayments since. I understand that she has defaulted on her loan as an active employee. Surely it was not her intent to not repay the loan, it's just that she was not receiving a paycheck. Does this count as a prohibited transaction and need to file the Form 5330 to pay the PT excise tax?
ETA Consulting LLC Posted December 17, 2012 Posted December 17, 2012 No. It's just a deemed distribution and a Form 1099R is issued. Is the owner eligible for a distribution from the plan (i.e. age 59 1/2)? Good Luck! CPC, QPA, QKA, TGPC, ERPA
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