Official Federal Forms > Department Of Treasury
Appendix C Part II Schedule 5 Plan Loan Failures 5 - Official Federal Forms
| Appendix C Part II Schedule 5 Plan Loan Failures Form. This is a national form and can be used in Department Of Treasury . |
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APPENDIX C PART II, SCHEDULE 5 Plan Loan Failures (Qualified Plans and 403(b) Plans) Plan Name: _______________________________ EIN: ___________ Plan #: _____ (Please include the plan name, Applicant's EIN, and plan number information on each page of the submission.) SECTION I. IDENTIFICATION OF FAILURE The plan identified above did not comply with the requirements of § 72(p)(2) of the Internal Revenue Code. (Note: The conditions of § 72(p)(2) must be satisfied for a participant loan to be exempt from being treated as a distribution to the participant under § 72(p)(1).) The failure occurred for the following reason(s) (check applicable boxes and provide the information requested): A. The loan(s) exceeded the limit under § 72(p)(2)(A) Plan Year Number of participants affected Total number of loans issued that violated § 72(p)(2)(A) B. Loan terms did not satisfy the limits on the duration of the loan under § 72(p)(2)(B) Plan Year Number of participants affected Total number of loans issued that violated § 72(p)(2)(B) - 1 - American LegalNet, Inc. www.FormsWorkFlow.com Plan Name: ________________________________ EIN: __________ Plan #: ______ C. Loan terms did not satisfy § 72(p)(2)(C) relating to the frequency and amortization of payments Plan Year Number of participants affected Total number of loans issued that violated § 72(p)(2)(C) D. Defaulted loan(s) (where the loan terms satisfied the requirements of § 72(p)(2), but default(s) occurred because loan payments were not made in accordance with the terms of the loan) Plan Year of loan defaults Number of participants affected Total number of loans in default SECTION II. ELIGIBILITY FOR USE OF APPENDIX C, SCHEDULE 5 Yes No A. Is any affected participant either a key employee (as defined in § 416(i)(1)) or an owner-employee (as defined in § 401(c)(3))? If "Yes," proceed to Section II B. If "No," skip Section II B and proceed to Section II C. - 2 - American LegalNet, Inc. www.FormsWorkFlow.com Plan Name: ________________________________ EIN: __________ Plan #: ______ Yes No B. Is the purpose of this request limited to permitting the Plan Sponsor to report the loan as a deemed distribution in the year of correction instead of the year of the failure? If "Yes," complete Section III and then proceed directly to Section IV D. (Sections IV A, B, and C do not apply.) If "No," STOP - do NOT use this schedule. Any request for relief should be made by filing a detailed written attachment describing the relief requested and the reasons why such relief should be granted. Yes No C. Will correction be completed before the maximum period for repayment of the loan (pursuant to § 72(p)(2)(B)) has expired? (Note: The maximum period is determined from the original date of the loan. Generally, this period is five years from the original date of the loan, except for home loans as described in § 72(p)(2)(B)(ii).) If "Yes," and the Plan Sponsor wants relief from reporting the loan as a deemed distribution, complete Section III and then answer applicable questions in Sections IV A through IV C. If "No," complete Section III and then proceed to Section IV D. SECTION III. EXPLANATION OF HOW AND WHY THE PLAN LOAN FAILURES OCCURRED - 3 - American LegalNet, Inc. www.FormsWorkFlow.com Plan Name: ________________________________ EIN: __________ Plan #: ______ SECTION IV. DESCRIPTION OF PROPOSED METHOD OF CORRECTION If the Plan Sponsor is requesting relief from reporting loans as deemed distributions, then complete Sections IV A, B, or C, as applicable. If the Plan Sponsor is only requesting postponement of reporting loans as deemed distributions on Form 1099-R, then proceed directly to Section IV D. A. Correction for Loans in Excess of § 72(p)(2)(A) Any participant affected by this failure will make a corrective repayment to the plan. After repaying the excess of the loan amount over the maximum loan amount under § 72(p)(2)(A) (the "excess loan amount"), the remaining balance of the loan will be repaid over the remaining period of the original loan (not beyond the period permitted under § 72(p)(2)(B), determined from the original date of the loan) in a manner that complies with the frequency and level payment requirements of § 72(p)(2)(C). The excess loan amount that will be repaid by the participant is determined based on how previously made payments have been applied to the loan. The previous loan payments were applied as follows (check applicable box, and complete necessary information) Prior loan payments were made in accordance with an amortization schedule that complied with the requirements of § 72(p)(2)(B) relating to the terms of the loan and § 72(p)(2)(C) relating to frequency, and level loan payments. For the purpose of determining the excess loan amount and the remaining outstanding amount of the loan to be repaid over the remaining period of the loan, the previously made loan payments will be applied as follows (check box that applies) 1. Solely to reduce the portion of the loan that did not exceed the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the excess loan amount plus interest thereon. 2. To reduce the excess loan amount to the extent of the interest thereon, with the remainder of the repayments applied to reduce the portion of the loan that did not exceed the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the excess loan amount. 3. Pro rata against the excess loan amount and the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the outstanding balance remaining on the excess loan amount on the date that corrective repayment is made. Prior loan payments were not made in accordance with an amortization schedule that complied with the requirements of §72(p)(2)(B) or (C). - 4 - American LegalNet, Inc. www.FormsWorkFlow.com Plan Name: ________________________________ EIN: __________ Plan #: ______ Methodology for determining the excess loan amount that will be repaid and the remaining outstanding balance of the loan that will be amortized over the remaining period of the loan: After the corrective repayment is made: (Check one of the two options listed below) Option 1: The remaining loan balance will be repaid according to the original amortization schedule. (This option is available only if the original amortization schedule would result in the loan being repaid within the maximum period permitted under §72(p)(2)(B) determined
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