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(1) Treatment as Distributions.--
(A) Loans.--If during any taxable year a
participant or beneficiary receives (directly or
indirectly) any amount as a loan from a qualified
employer plan, such amount shall be treated as
having been received by such individual as a
distribution under such plan.
* * * * * * *
(2) Exception for Certain Loans.--
(A) General rule.--Paragraph (1) shall
not apply to any loan to the extent that
such loan (when added to the outstanding
balance of all other loans from such plan
whether made on, before, or after August 13,
1982), does not exceed the lesser of—
(i) $50,000, or
(ii) � of the present value of the
nonforfeitable accrued benefit of
the employee under the plan (but
not less than $10,000).
(B) Requirement that the loan be
repayable within 5 years.--
(i) In general.--Subparagraph (A)
shall not apply to any loan unless such
loan, by its terms, is required to be
repaid within 5 years.
(ii) Exception for home loans.--
Clause (i) shall not apply to any
loan used to acquire, construct,
reconstruct, or substantially
rehabilitate any dwelling unit which
within a reasonable time is to be used
(determined at the time the loan is
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Last modified: May 25, 2011