Editor's Note: This is the second installment in a series concerning correcting plan loan failures.
Q. Can a loan default be self-corrected if the 5-year repayment period has expired?
A. If the 5-year repayment period has expired, the employer cannot use the SCP correction methods (e.g., reamortization) that avoids the requirement to issue the Form 1099-R. However, the employer may use the SCP correction method that allows the employer to issue the Form 1099-R in the year of correction (as opposed to the year of failure).
Editor’s Note: This content is taken from “Loans: Correcting Taxation, Qualification and Fiduciary Failures,” an April 15, 2020 ASPPA Webinar presented by Stephen W. Forbes J.D., LL.M. of Forbes Retirement Plan Consulting.
Opinions expressed are those of the author, and do not necessarily reflect the views of ASPPA or its members.
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