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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.
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Can Someone Help Shed Some Light On This Matter Or Provide Explanation As To Why There Should Be An Adjusted Tax Basis On A 403b Account And In What Circumstance Would Someone Be Taxed For An Amount Greater Than The Distribution From The Deferred Plan.
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After An Audit, The Irs Determined The Default Was A Taxable Distribution In The Year The Plan’s Grace Period For Repayment Expired.
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