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Loan - should of been defaulted


Lou81

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We have a plan that we just took over as TPA.  In reviewing the information it was discovered, that yhere is a loan that was issued 8/2012 that is still showing as active.    Does not appear that any loan payments were ever made nor was it ever defaulted.

If I am reading Rev Proc 2021-30 correctly, 6.07(3)(d)  -  it look like i can use the SCP if the participant would pay the loan off in full, plus interest.

Am  I reading correctly or does this have to be filed through VCP?

Thank you!

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I'm assuming that it's not a loan for primary residence and it was a general purpose loan? If that's the case, the participant cannot make payment on the loan because the eligible maximum period for repayment has expired (see Rev Proc 2021-30 6.07(3)(a). Section 6.07(2) says to issue a 1099R for the year in correction, which I'm assuming is this year. 

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