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Final regs issued on qualified plan loan offsets

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Tax Hot Topics newsletter 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.

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

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

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