loan default and repayment

[thepensionmaven]

I posted this elsewhere, but don't think it would be seen.

We just took over a profit sharing plan in which the owner took a loan in November, 2010, has never made any payments, but is in a financial situation to pay the entire loan back plus interest.

He has not filed 2010 or 2011 5500s, but we can address that under DFVC.

Since I have never dealt with this prior to this point, he's obviously defaulted on the loan in 2011 and should be issued a 1099R for 2011.

But, does the fact that he has defaulted negate the fact that he wants to, and is in a position to, repay the loan now with the interest owed?

Any suggestions are appreciated.

[rcline46]

Rev Proc 2013-12 - look up loan fixes, follow the rules.