Deemed distribution
Treated-as-distributed amount when a participant loan defaults under IRC Section 72(p).
Definition
A deemed distribution occurs when a participant loan does not meet the IRC Section 72(p) requirements (5-year repayment, level amortization, $50,000/50% limit). The defaulted loan amount becomes taxable income to the participant in the year of default and may carry a 10% early withdrawal penalty if under age 59½. Solo 5500 Desk does not handle deemed distributions.
Why it matters
For IRS Form 5500-EZ, this term helps decide which records, dates, values, or review questions belong in the packet.
How the tool uses it
Solo 5500 treats this as a review signal. The user enters the facts, checks the source-linked explanation, reviews the packet, and files through the official channel when the supported case still fits.
When to check the source
Check the official source when the answer depends on eligibility, late filing relief, official correspondence, valuation, or a fact you cannot verify from your own records.
Source and review date
Last reviewed: . Use the linked source for the official wording behind this term.
Official source: IRS Form 5500-EZ filing notices