When is a loan considered a deemed distribution?

A deemed distribution occurs the first time that any of the requirements above are not satisfied in form or operation. This may occur at the time the loan is made or at a later date. See Treas. Reg. Section 1.72 (p)-1 Q&A-4. In three situations, the entire loan is considered a deemed distribution on the date the loan is made:

What is a deemed distribution 401(k)?

A deemed distribution occurs when a participant violates certain terms of a 401 (k) loan such as the loan amount, loan repayment schedule, or the loan term. For example, if there are missed loan payments by the end of the cure period, the defaulted loan is considered a deemed distribution.

Is a loan offset a deemed distribution?

The plan loan offset is treated as an actual distribution, and it may not be paid back to the retirement plan. A deemed distribution occurs when certain loan terms are not met. For example, if a participant misses loan payments after the end of the cure period, the defaulted loan is considered to be a deemed distribution.