In light of the change to the loan offset rules included in the Tax Cuts and Jobs Act of 2017, we have updated the Special Tax Notice for our qualified and 403(b) plans. Under IRC Section 402(f), this notice is required to be distributed to all participants receiving an eligible rollover distribution.
Because our Special Tax Notice contains the “Safe Harbor Explanation” provided in Revenue Procedure 2009-68, we added a note under the title “If you have an outstanding loan that is being offset” to inform participants of the extended deadline. The IRS provided text has not been changed to preserve reliance on the IRS provided language in the notice.
***Recent law changes (Tax Cuts and Jobs Act) have extended the amount of time you have to rollover a loan offset from 60 days to until your tax filing due date (including extensions) for the year in which the loan offset amount arose. This extension only applies if the offset was due to your termination from service or termination of the plan.***
Changes to Plan Loan Rollover Rules
The Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017, extends the rollover period for loan offsets where the offset was due to the participant’s termination from service or termination of the plan.
Prior to the law a participant had to rollover the loan offset, no matter the reason for the offset,following distribution. The new law extends that time to the due date (including extensions) for filing the federal income tax return for the year in which the loan offset occurs. This change will provide more time for participants to come up with the loan offset amount and have a full tax-free rollover.