A:

It depends.

If the loan is in good standing - the participant did not default on the loan and the loan meets other statutory requirements - then the loan is treated as an offset and is rollover eligible.

If the loan is in default, then the amount is not rollover eligible. Reasons for a loan being in default include the participant not making loan repayments on at least a quarterly basis.

A loan offset is reported as a regular distribution with Code 1 or Code 7 - depending on the participant's age - in

Box 7

of Form 1099-R.

A deemed distribution is reported with Code L in B

ox 7

of Form 1099-R.

For related reading, see Qualified Plan Loans: Guidelines To Operations and Borrowing From Your Plan.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ...
  2. What is fiduciary liability insurance, and what are its benefits?

    Understand what fiduciary liability insurance is, what companies or individuals can benefit from having it, and when it is ...
  3. How should I invest the money I keep on my IRA?

    For individuals who are just starting to save, certificates of deposit can be a good place to start, but the interest rates ...
  4. Why choosing the right investment advisor is crucial for your portfolio's health

    Absolutely! Just as finding a good mechanic will help keep your car running smoothly, finding a good broker or financial ...
RELATED TERMS
  1. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  2. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  3. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  4. MyRA

    A new tax-advantaged retirement account that President Barack ...
  5. Target-Date Fund

    A mutual fund in the hybrid category that automatically resets ...
  6. Provident Fund

    A compulsory, government-managed retirement savings scheme used ...

You May Also Like

Related Articles
  1. Professionals

    5 Signs That You Have a Lousy 401(k) ...

  2. Entrepreneurship

    Why Small Business Owners Need Financial ...

  3. Mutual Funds & ETFs

    This Gold ETF is Fine for Traders, Not ...

  4. Mutual Funds & ETFs

    Should GE Be Part of Your Portfolio?

  5. Retirement

    Top 10 Stocks for Retirement Portfolios

Trading Center