distribution code L1

[Guest ngresham]

I have a question about the "L" distribution code. If a terminated participant defaults on their loan, should the distribution code be 1 or L1?

[Michael Devault]

My interpretation of the instructions is that you should use code L with a 1 or 2, as appropriate. The use of the L would distinguish the distribution as a defaulted loan, and the 1 or 2 would indicate whether or not it is subject to the 10% premature distribution penalty, as well.

Hope this helps.