403b loan

[Dennis Powless]

"""""Poor dude just wants his books to balance in GnuCash, not do a deep
dive on treasury rules & regs."""""

Agreed, however I have learned a great deal today and I am thankful.

I have figured it out what I am going to do and it is all well now,

Thanks for the all the input.

d


On Tue, Feb 11, 2014 at 10:44 AM, Christopher Singley <csingley at gmail.com>wrote:

>
>
> On Tue, Feb 11, 2014 at 3:10 PM, Mike or Penny Novack <
> stepbystepfarm at mtdata.com> wrote:
>
>>
>>
>>> OP said "loan" not "withdrawal", so I presume the plan administrator
>>> agrees that the distributions qualify under the rules.  I repeat, there are
>>> no tax consequences to qualifying 403(b) loans that are properly repaid.
>>>  There are tax consequences to withdrawals.
>>>
>>>  Excuse me please, but the loan is always going to be a POTENTIAL
>> withdrawal which is why it must be properly accounted for. You even
>> included the proviso "that are properly repaid" but apparently do not
>> recognize that as a future conditional event which may or may not take
>> place. What happens if future events conspire that the loan cannot be
>> repaid?
>>
>> Michael
>>
>
> If the loan can't be repaid, OP is going to get screwed by IRS.  He'll pay
> taxes & penalties.  This can be fully accounted for by JEs booked in the
> period when the screwing is administered - e.g. credit cash, debit tax
> expense.  This is completely orthogonal to the accounting treatment
> (especially on the balance sheet) during prior periods.  How would this
> screwing be better accounted for by having previously maintained a
> full-blown accounting of all the different tax buckets comprising his share
> of the plan's assets and liabilities?  You're not going to need to
> calculate your own penalties and interest; you'll get a nice letter from
> IRS informing you of your obligations.  There's your backup, book your JE,
> administer some moisturizer to relieve the chafing.  All done.
>
> Look, defined contribution plans are less paternalistic than defined
> benefit plans, but a major policy goal of sections 401 and 403 of the IRC
> is that the burden for tax accounting should fall upon the plan
> administrator, rather than requiring high school dropouts to maintain
> scrupulous distinctions between pre- and post-tax contributions, deferred
> wages and company profit-sharing contributions, basis and earnings.  While
> these things are of importance to developers who write software for
> financial institutions, there are very limited circumstances under which
> plan participants actually need to gain an independent understanding of
> these things, rather than relying upon information spoon-fed to them by the
> plan administrator... and most of those circumstances are usually forbidden
> by the plan trust documents, to make life easier for the sponsors &
> administrators.
>
> I personally would track the plan loan balance, because it matters to
> me... most materially, because outstanding borrowings limit further
> borrowings against plan assets, and sometimes having a tight reckoning of
> all my sources of liquidity is an analysis I wish to perform.  But that
> certainly isn't necessary - all that's really necessary is to track tax
> consequences, and again, there really aren't any here.  Pretending the
> whole thing doesn't exist (i.e. eliminating the asset/liability upon
> consolidation) is certainly a valid accounting treatment, and it's exactly
> how the OP said he thinks about the situation (i.e. shifting money from his
> left pocket to his right pocket, which is the economic substance of this
> transaction).  "Natural" and "intuitive" are appealing features of any
> accounting system, no?  Is there some important blocker to the KISS
> principle here?  Poor dude just wants his books to balance in GnuCash, not
> do a deep dive on treasury rules & regs.
>
>