Participants are Responsible to Verify Plan Loan Repayments – So Says the Tax Court

Participants are Responsible to Verify Plan Loan Repayments – So Says the Tax Court

By: David I Gensler, MSPA, MAAA, EA

 

A recent tax court ruling, Louelia Salomon Frias v. Commissioner, illustrates the importance of verifying that loan repayments are actually being made. Moreover, it is the participant’s responsibility to do so.

The Facts

The participant, Louelia Salomon Frias was a participant in her employer’s 401(k) plan. On 07/27/2012, she signed a loan agreement to borrow $40,000 from her account, which she would repay over two years through bi-weekly payroll deductions. She then went on an approved maternity leave. Read More