![]() ![]() A defaulted loan will continue to accrue interest which may result in a depletion of your contract. A defaulted loan will remain outstanding on your account and affect the values for future loans. Please consult your tax advisor for additional information. A distribution to cover a missed payment or defaulted loan is considered taxable income. ![]() Please be aware that at the point the 27-day grace period (after the due date of your fourth missed payment) extends over the calendar quarter, the entire loan will be considered in default. If you do not qualify for a distribution and miss four payments, the entire loan will be in default and considered a deemed distribution and be taxable income for the year in which it occurred. If you qualify for a distribution, according to IRS regulations, funds will be taken from your contract value to cover the missed payment. A payment received after this grace period is considered a missed payment. To be in compliance with this regulation, each loan payment must be paid within the 27-day grace period before or after the due date. Loan Default. The IRS requires regular repayments of loans from plans. ![]()
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