Proposed regs address extended QPLO rollover

Tax Hot Topics newsletter The IRS issued proposed regulations (REG-116475-19) to reflect changes made by the Tax Cuts and Jobs Act (TCJA) that provide an extended rollover period for employees to transfer, within limits, certain outstanding retirement plan loan balances (qualified plan loan offsets or QPLOs) to other tax-favored retirement accounts.

QPLOs are amounts owed to employer-sponsored plans when the retirement plan has been terminated or a plan participant has separated from employment with the employer. The guidance explains that, under the general rollover timing rules, employees generally must roll over distributions not associated with a plan loan to an eligible account within 60 days. However, under the changes made by TCJA, plan participants would have 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 to rollover any QPLO amounts into eligible accounts. QPLOs not rolled over timely would be subject to the 10% early withdrawal penalty plus any applicable income taxes.

Jeff Martin
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
+1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
+1 202 861 4107

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