Final regs issued on qualified plan loan offsets


The IRS has issued final regulations (TD 9937) addressing rollovers of certain outstanding retirement plan loan balances, also known as qualified plan loan offsets (QPLOs) to other tax-favored retirement accounts. The guidance adopts proposed regulations issued in August with one significant modification.

QPLOs are outstanding participant loans from employer-sponsored retirement plans that become due when the retirement plan has been terminated or a plan participant has separated from employment with the employer. The Tax Cuts and Jobs Act (TCJA) extended the prior 60-day rollover period for QPLOs, giving employees until the individual tax filing due date (plus an automatic six-month extension if certain conditions are satisfied) for the taxable year in which the offset occurs. The IRS issued proposed regulations in August to provide guidance related to the changes made by the TCJA.

The final regulations largely adopt the proposed regulations but provide a delayed effective date in response to a taxpayer comment. The final regulations will now apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after Jan. 1, 2021.




Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More tax hot topics