Deemed Distributions and Loan Offsets.

CFR · 2024-01-01 · US · Title 5

(a) The TSP record keeper will ensure that all requirements set forth in section 72(p) of the Internal Revenue Code and the regulations promulgated thereunder with respect to deemed distributions are satisfied. (1) The TSP record keeper will declare the entire unpaid balance of an outstanding loan (including interest) to be a deemed distribution if: (i) The participant misses two or more loan payments or the participant's payments are made for less than the required amount, and the delinquency is not cured within the cure period; (ii) The loan is not repaid in full by the maximum term limit; or (iii) A participant is in a confirmed nonpay status for a period of one year or more, has not advised the TSP record keeper that he or she is serving on active military duty, and payments are not resumed after the participant is notified the loan has been reamortized. (2) Loan taxation does not relieve a participant of his or her obligation to repay the taxed loan amount. A participant may repay a taxed loan in full (including accrued interest) via check or money order up until the time he or she separates from Government service. The tax basis in a participant's TSP account will be adjusted to reflect the repayment of a taxed loan. (3) If a participant does not repay a taxed loan: (i) His or her account balance will be permanently reduced; and (ii) The taxed loan will count as one of the two loans the participant is permitted per account and is treated as an outstanding loan balance w

official document · source cfr-2024 · id 5:§ 1655.15