delinquent loan

[Tom]

Loan was initiated by owner of a business for himself in 2017.  Loan repayments were not started by his payroll clerk.  And so six months go by without any loan repayments.  The loan was re-amortized over the remaining life of the loan and repayments started.  A VCP filing is being prepared.

Question for the 2017 5500 - is there a prohibited transaction to report.  It seems this just adds insult to injury as the IRS will likely approve the fix under VCP and the use fee will be paid.  Seems like double jeopardy to also report it as a prohibited transaction.

Comments? Thanks in advance.

[Madison71]

My recollection is you are no longer required to report delinquent loans as a prohibited transaction on Schedule G (if filing Form 5500).  You report as a delinquent contribution on SF, Schedule I or H depending on Plan and continue to do so until the plan year following correction.  

[Mike Preston]

Let us know if you are successful.  I just finished a VCP filing for a very similar circumstance and the IRS insisted on deeming the loan.  They gave the taxpayer "relief" in the form of having the taxpayer choose which year the loan would be deemed taxable in.  Hope you get your re-amortization without a deem.