Jump to content

Loan offset


Recommended Posts

Plan sponsor has opted for the loan to be offset, the plan is terminating any idea how the loan offset can be dealt with since some of the participants have taken the distribution and the loan is still outstanding. 

Link to comment
Share on other sites

What do you mean the sponsor has "opted" for a loan offset? The plan has a written loan policy, the sponsor needs to follow those procedures which will dictate when a default and offset will occur.

A distribution upon plan termination would apply to a participant's entire account, including their outstanding loan. So the loan offset should just be a matter of reporting correctly. If the participant elected a cash distribution (not a rollover) don't forget to take the amount of the outstanding loan into account when calculating the amount of withholding.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.

Link to comment
Share on other sites

If the participant has already taken the cash distribution and if the loan is outstanding and wishes to offset, I assume this will fall into QPLO correct? and I believe we will require to code the loan correctly on their 1099 and taxes are deducted correctly for the loan correct? 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...