403b loan

[Dennis Powless]

I guess your right... I was trying to make it so I wouldn't have to double
enter things, but it seems that is not possible.  In the end I decided to
treat the 403b loan as an asset and a subaccount of the 403b fund account.

Thanks for all the valuable information.

d


On Mon, Feb 10, 2014 at 5:15 PM, Christopher Singley <csingley at gmail.com>wrote:

> The 403(b) plan is a trust; its assets are not your assets.  What you own
> is an interest in the trust.  It can be convenient to "look through" the
> trust and consolidate your portion of the plan's assets onto your own
> balance sheet.
>
> If you're consolidating your portion of the plan's assets onto your own
> balance sheet, make sure you consolidate the loan asset too.  I suggest you
> set up your chart of accounts so you have a liability account that reflects
> your 403(b) loan balance, and an asset account that reflects your 403(b)
> account balance.  The 403(b) loan receivable from you would be a subaccount
> of the 403(b) asset account.
>
> When you borrow money from the plan, you create a liability toward the
> plan - debit personal cash, credit payable to 403(b).  On the plan trust's
> own books, it now has an asset that is a loan receivable from you - debit
> receivable asset, credit plan cash.  That's how the splits go.
>
> When you make payments on the loan, credit your personal cash, debit your
> personal liability toward the plan, debit personal interest expense...
> debit plan cash, credit plan loan receivable from you, credit plan interest
> income.  That's how those splits go.
>
> Just a suggestion.
>
>
> On Mon, Feb 10, 2014 at 9:09 PM, Mike or Penny Novack <
> stepbystepfarm at mtdata.com> wrote:
>
>> Dennis
>>
>>
>>  But this 'loan' is not a real liability, since it should be
>>> considered an asset.  I think?
>>>
>>>
>>>
>> That (probably) involves questions that are far beyond the  what we here
>> on this list should attempt to answer. I am NOT a tax advisor and  know
>> nothing about the rules for a 403b. But if they are anything as complex as
>> the rules for 401k loans (I do know the 401k rules)  all sorts of things
>> are involved before you can say "not a real loan". Yes these are your
>> funds, but how a loan that is never paid back affects your tax liability
>> and possible penalties may have dependencies on things like your age when
>> you took this loan, etc.
>>
>> I am going to guess that if below age 59 1/2 (or whatever the age is for
>> 403b above which no penalty for an "early distribution") you might want to
>> treat this as a real loan. But I repeat, I'm NOT a tax advisor. You should
>> consult with one or at least read the small print of the rules very
>> carefully.There could even be dependencies related to the purpose of the
>> loan.
>>
>> Michael D Novack
>>
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