Defaulted loan Still on the Books

We had a participant in a plan take a loan, paid three installments and defaulted on the loan.

The the plan terminated, we have paid out all but three participants and I noticed that the investment company is carrying an accrual for the unpaid balance of the loan.

This makes no sense to me, the loan is out of the plan, the participant terminated employment prior to the plan termination, the participant defaulted and was issued a 1099R.

What am I missing here??

You ar emissing nothing.  Let the investment company know the loan was treated as a distribution and a 1099-R has been issued and they should update thier records accordingly.