deemed distribution vs offset distribution

[thepensionmaven]

Participant has outstanding loan which he has been repaying through payroll deduction religiously, through his date of termination via payroll deductions. Terminated 6/1, loan paid through 5/29 installment. He is not over age 59 ½.

Is a terminated participant eligible for the "cure period" of 60 days after the calendar quarter of missed payment to repay the missed payments and bring the loan up to date through the end of the cure period before he has incurred a "deemed distribution"??

Of course, the plan doc does not address.

[K2retire]

Does the loan policy say that the loan is due and payable on termination of employment?

[rcline46]

Our loan program says the plan loan is due immediately upon termination. That makes it a distribution irrespective of any other distribution rules in the plan. Nothing "deemed" about it.

[My 2 cents]

Our loan program says the plan loan is due immediately upon termination. That makes it a distribution irrespective of any other distribution rules in the plan. Nothing "deemed" about it.

Even if the outstanding balance is promptly paid back? One presumes that getting the loan paid back is the primary reason for such a provision. Isn't it?

[QDROphile]

If you do not have a plan document or written loan policy that covers the situatuation, fix it.