- 5 -
distributions. See generally Plotkin v. Commissioner, T.C. Memo.
2001-71; Patrick v. Commissioner, T.C. Memo. 1998-30, affd. per
curiam without published opinion 181 F.3d 103 (6th Cir. 1999);
Prince v. Commissioner, T.C. Memo. 1997-324; Estate of Gray v.
Commissioner, T.C. Memo. 1995-421. For purposes of section
72(p), a “qualified employer plan” includes a plan described in
section 401(a) that includes a trust exempt from tax under
section 501(a), and therefore includes Mr. White’s 401(k) plan.
See sec. 72(p)(4)(A)(i)(I).
Section 72(p)(1)(A) provides, as a general rule, that if a
participant or beneficiary receives, directly or indirectly, any
amount as a loan from a qualified employer plan, then such amount
shall be treated as having been received by such individual as a
distribution under such plan. Thus, under the general rule of
section 72(p)(1)(A), the making of a loan from a qualified
employer plan gives rise to a deemed distribution that is taxable
in the year in which the loan is received.
However, section 72(p)(2)(A) provides an exception for
certain loans. Thus, as relevant herein, the mere making of a
loan that does not exceed one-half of the nonforteitable accrued
benefit of the employee under the plan, that is repayable within
5 years, and that provides for substantially level amortization
does not give rise to a deemed distribution. See sec.
72(p)(2)(A)(ii), (B)(i), and (C).
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011