The IRS allows loans to be taken from a company annuity plan tax-free provided the loan meets certain parameters. Parameters include a maximum amount of $50,000, or 50 percent of the vested account balance, whichever is the lesser amount. In addition, the loan must be repaid within five years, unless the loan is for the purchase of a main residence. Loans not meeting all IRS requirements, are considered to be taxable distributions. For instance, loans not repaid to the employee plan at the time the employee leaves the company are reported by the company on Form 1099-R as a taxable distribution.
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