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Each Of These Failures, And Other Issues, Will Cause The Loan Or A Portion Of The Loan To Become A Deemed Distribution For Tax Purposes.

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Defaulting On A 403 B Loan Typically Results In The Outstanding Balance Being Treated As A Taxable Distribution, Subject To Income Tax And Possibly A 10% Early Withdrawal Penalty If Under Age 59½.

Each of these failures, and other issues, will cause the loan or a portion of the loan to become a deemed distribution for tax purposes. Thanks for any assistance you can provide. When a loan defaults, the outstanding balance is considered a distribution. This distribution is treated as taxable income in the year it occurs.

This Issue Snapshot Will Summarize What Triggers A Deemed Distribution And When It Can Occur.

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