I just spent an hour on hold with IRS, only to have them tell me they will get back to me within 15 days with a response to my question. I'm also getting mixed answers from vets @ my office, and our home office, so if anyone could point me in the right direction, I'd be very grateful! Here goes:
I have a client that took a $10,000 loan from their 403B 5 years ago (at the time of the loan, they were with AIG VALIC). The client missed their first loan payment (they *claim* they were never told the loan had to be repaid within a certain period of time...I'm sure they just weren't paying attention) and the loan went into to default. So for that tax year, they had to pay taxes + penalty on the premature distribution. No problem.
I transferred (90-24) this account to my firm (not AIG) last year (pre-9/24). The client is now in a bind again, and wants to take another loan from the 403B...can they?
One person at my office told me that "once you default on a 403B loan, you can never take another one for the rest of your life" - that doesn't make any sense to me if the previous tax consequences have already been taken care of, and there are no other 401K/403B loans currently outstanding. Can anyone confirm/dispel that for me?