Taxpayer stopped paying 403B loan AFTER separation. It seems it should qualify for Code M as a Qualified Plan Loan Offset (and thus subject to rollover) but they insist on Code L. Anyone have experience with this issue?
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"Dude, you are correct" Rapid Robert -
I'm not certain but I don't believe all qualified plans may provide for a loan offset. Take a look at Reg. 1.402(c)-2, Q&A9. In A(9)(b) I see "under the plan terms" which suggests it may not be an option???
In any case, I would review the cited Q&A.
It seems like you may have a deemed distribution. I think treatment as a loan offset requires an actual distribution.
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