{"id":32786,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/tax-reporting-of-plan-loan-defaults.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"tax-reporting-of-plan-loan-defaults","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/finance\/tax-reporting-of-plan-loan-defaults.html","title":{"rendered":"Tax Reporting of Plan Loan Defaults"},"content":{"rendered":"
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The IRS Form 1099-R for 1997 includes a new distribution code for reporting certain taxable amounts relating to plan loans. This new code comes into play in case of a "deemed distribution" that results when a participant defaults on a plan loan or the loan fails to meet the Internal Revenue Code section 72(p) requirements for a nontaxable plan loan. When a deemed distribution occurs, usually as a result of an employee's failure to make timely loan payments, the principal balance and accrued-but-unpaid interest become taxable and must be reported on a 1099-R, separately from any other reportable amounts.<\/p>

The new code, which should be reported in Box 7, is the capital letter "L." This code should only be used for a deemed distribution, which is a taxable event that occurs before the plan participant may receive a distribution of his or her entire plan benefit. The new code should not be used for an "offset distribution" that results when a loan becomes a taxable distribution upon termination of employment.<\/p><\/div>","protected":false},"excerpt":{"rendered":"

The IRS Form 1099-R for 1997 includes a new distribution code for reporting certain taxable amounts relating to plan loans. This new code comes into play in case of a “deemed distribution” that results when a participant defaults on a plan loan or …<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_categories":[6480,6484,6479,6483],"class_list":["post-32786","corporate","type-corporate","status-publish","hentry","corporate_categories-finance__bankruptcy","corporate_categories-finance__tax__federal-tax","corporate_categories-finance","corporate_categories-finance__tax"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate\/32786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=32786"}],"wp:term":[{"taxonomy":"corporate_categories","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_categories?post=32786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}