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The Benefits and Pitfalls of Refinancing 401(k) Plan Loans
Warner Norcross & Judd LLP Link to more items from this source
[Guidance Overview]
Mar. 13, 2014
"If the amount and term of the new loan are not carefully calculated and administered, refinancing a participant's loan can trigger unintended tax consequences -- a deemed distribution.... If the repayment period of the replacement loan ends on or before the maximum permissible term of the existing loan -- no later than 5 years from the existing loan's origination date -- only the replacement loan is treated as outstanding to determine if the replacement loan exceeds the maximum dollar limit.... Where the term of the replacement loan ends beyond the maximum permissible term of the existing loan -- the replacement loan's payment ending date is more than 5 years from the existing loan's origination date -- both loans are treated as outstanding on the date of the replacement loan."

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