If there are two plans and one is terminated, creating a distributable event, can loans in the terminated plan be rolled over?

By Denise Appleby AAA
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. How do deferred tax assets help in meeting retirement goals?

    Learn how tax deferred assets can help individuals achieve long-term financial goals such as retirement and how they differ ...
  2. Should I use a deferred tax asset for all of my retirement funds?

    Look outside tax-deferred accounts for retirement savings that are worthwhile now and later. Invest a portion in after-tax ...
  3. What are the best ways to lower my taxable income?

    Paying taxes is an unavoidable obligation each year, but individuals and business owners can take advantage of various strategies ...
  4. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ...
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. Mutual Funds & ETFs

    Greedy on the Dollar? See This Leveraged ...

  2. Trading Strategies

    American Express: Headwinds and Tailwinds

  3. Professionals

    Why Retirement Advice Is Better But ...

  4. Stock Analysis

    Playing The Bull Run Without Worry

  5. Professionals

    Coming Soon: Private Equity In 401(k) ...

Trading Center