The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9937) concerning the extended rollover period for a qualified plan loan offset—a type of plan loan offset—as enacted by a provision of the U.S. 2017 tax law (Pub. L. No. 115-97) or the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA).
Read the final regulations [PDF 247 KB] (six pages as published in the Federal Register on January 6, 2021)
The TJCA provision extends the period allowed for a qualified plan loan offset amount to be contributed to an eligible retirement plan as a rollover contribution from 60 days to the due date, including extensions, for filing the federal income tax return for the tax year the loan offset occurs. This extension applies to a qualified plan loan offset amount distributed from a qualified retirement plan, section 403(b) plan, or governmental section 457(b) plan solely because of a termination of the plan or the failure to meet the repayment terms because of a severance from employment.
Regulations proposed in August 2020 provided guidance in a “question and answer” (Q&A) format. The preamble to the final regulations states that the proposed regulations are adopted but “with one important modification relating to the applicability date.”
The final regulations apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after January 1, 2021. The preamble provides as an example that the rules in Reg. section 1.402(c)-3 will first apply to 2021 Forms 1099-R required to be filed and furnished in 2022.
However, taxpayers (including a filer of a Form 1099-R) may apply these regulations with respect to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after August 20, 2020 (the date of publication of the proposed regulations).
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