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Revenue Code; and (6) total loans to any one participant must be
limited to the lesser of $50,000, with some adjustment for
outstanding balance of loans, or one-half of a participant's or
beneficiary's vested account balance.3 Failure to make payments
when due under the terms of the loan agreement would result in a
default, whereby the trustee had the authority to collect the
balance of the loan through any reasonable action that included
instituting a lawsuit, foreclosing on any security, or
recharacterizing the loan as a deemed distribution.
As participants in the Plan, petitioners entered into a
series of transactions with the Plan. During 1992, Brian
received $207,300 from the Plan.4 The following promissory notes
were prepared to evidence the transfers of the underlying
amounts:
Date on Note Amount of Note
01/31/92 $110,000
02/28/92 26,000
03/31/92 6,000
04/30/92 2,000
05/31/92 10,000
06/30/92 2,000
07/31/92 31,000
08/31/92 10,000
2(...continued)
loan was used to acquire a participant's principal residence.
3 These requirements were intended to incorporate the loan
requirements embodied in sec. 72(p)(2)(A), (B), and (C).
4 At that time, Brian had not attained either retirement
age under the Plan or the age of 59-1/2. See sec. 72(t)(2).
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