Cure period - Does it apply to the last payment of 5 year loan term

[ErisaGooroo]

It is my understanding that the 5 year loan term begins when the funds are withdrawn from the participant's account (essentially the date of the check) rather than the date of receipt of funds by the participant. Do you agree?

What if an amortization schedule is prepared with a 5 year loan term based on a date later than the date the funds are removed from the participant's account such as 30 days later from the date the loan is processed? This would cause the loan to exceed the 5 year max loan term at its inception. Would the entire loan be considered a deemed loan?

In an earlier benefitslink thread dated back to 2003, IRS seemed to take the position that curing a missed payment after the 5 year loan term but within the cure period provided by the plan and within the normal limitations of 72(p)-1, Q&A-10 would not violate the requirements of 72(p)(2(B). Payments made within the cure period are deemed to relate back and considered made on the date the installment payment was due. However, something posted by QDROPHIL seemed to contradict this opinion and reverts back to the cure period not applying to the last payment.

Thoughts on these two issues?

Any official cites or reference to material on this topic would be very helpful. Thank you!

[Bird]

Is this a theoretical discussion? We routinely prepare loan schedules based around payroll dates, and if it happens to get processed, say a week ahead of time, it's not a concern. I'm not sure how or why you wind up with a receipt of funds 30 days before the inception date on a schedule.

It is my understanding that the 5 year loan term begins when the funds are withdrawn from the participant's account (essentially the date of the check) rather than the date of receipt of funds by the participant. Do you agree?

I think I could make a case for date of receipt, if I had to.