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Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Rules and Regulations agree that additional time to implement 1.402c3 is appropriate. Accordingly, the applicability date in these final regulations is revised from the QPLO
proposed regulations, which had proposed to apply the regulations to plan loan offset amounts treated as distributed on or after the date of publication of final regulations. Under the revised applicability date, the final regulations will apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after January 1, 2021. Thus, for example, the rules in 1.402c3 will first apply to 2021 Form 1099Rs required to be filed and furnished in 2022 more than one year after the date of publication of the final regulations.
This delayed applicability date will give plan administrators and recordkeepers additional time to program systems and otherwise establish procedures for obtaining the exact date of severance from employment of a plan participant and tracking the one-year anniversary of that date.
The applicability date in these final regulations is also revised to provide that taxpayers including a filer of a Form 1099R may apply these regulations with respect to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after August 20, 2020, which is the date of the publication of the QPLO proposed regulations.
Applicability Date These regulations apply to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after January 1, 2021.
Thus, for example, the rules in 1.402c3 will first apply to 2021
Form 1099Rs required to be filed and furnished in 2022. However, taxpayers including a filer of a Form 1099R may apply these regulations with respect to plan loan offset amounts, including qualified plan loan offset amounts, treated as distributed on or after August 20, 2020.

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Statement of Availability for IRS
Documents For copies of recently issued Revenue Procedures, Revenue Rulings, Notices, and other guidance published in the Internal Revenue Bulletin, please visit the IRS website at https www.irs.gov.
Special Analyses These regulations are not subject to review under section 6b of Executive Order 12866 pursuant to the Memorandum of Agreement April 11, 2018 between the Treasury Department and the Office of Management and
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Budget regarding review of tax regulations.
In addition, it is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act 5 U.S.C. chapter 6. This certification is based on the fact that the regulations reflect the statutory changes to section 402c made by section 13613
of TCJA. The regulations reflect the extended rollover period for QPLO
amounts, as amended by TCJA.
Specifically, the regulations reflect the statute in a manner that i is consistent with the statutory language, ii provides certain clarifications, and iii eases and facilitates plan administration.
Although the regulations might affect a substantial number of individuals, the economic impact of the regulations is not expected to be significant. The regulations do not impose any new compliance burdens on taxpayers and are not expected to result in any economically meaningful changes in behavior.
Pursuant to section 7805f, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business, and no comments were received.
Drafting Information The principal authors of these regulations are Naomi Lehr and Pamela R Kinard of the Office of Associate Chief Counsel Employee Benefits, Exempt Organizations, and Employment Taxes, although other persons in the IRS and the Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows:
PART 1INCOME TAXES
1. The authority citation for part 1
continues to read in part as follows:

Authority: 26 U.S.C. 7805

2. Section 1.402c3 is added to read as follows:

1.402c3 Eligible rollover distributions;
Qualified plan loan offsets.

a1 Q1. What special rollover rules apply to a plan loan offset amount including a qualified plan loan offset amount?

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2 A1i In generalA Eligible rollover distribution. A distribution of a plan loan offset amount, as defined in paragraph a2iiiA of this section including a qualified plan loan offset amount, a type of plan loan offset amount defined in paragraph a2iiiB of this section, is an eligible rollover distribution if it satisfies 1.402c2, Q&A3 and 4.
B Other rules relating to plan loan offset amounts. See 1.401a311, Q&A16, for guidance concerning the offering of a direct rollover of a plan loan offset amount. See also 31.3405c1, Q&A11, of this chapter for guidance concerning special withholding rules with respect to plan loan offset amounts.
ii Rollover period for a plan loan offset amountA Plan loan offset amount that is not a qualified plan loan offset amount. A distribution of a plan loan offset amount that is an eligible rollover distribution and not a qualified plan loan offset amount may be rolled over by the employee or spousal distributee to an eligible retirement plan as defined in 1.402c2, Q&A
2 within the 60-day period set forth in section 402c3A.
B Plan loan offset amount that is a qualified plan loan offset amount. A
distribution of a plan loan offset amount that is an eligible rollover distribution and that is a qualified plan loan offset amount may be rolled over by the employee or spousal distributee to an eligible retirement plan within the period set forth in section 402c3C, which is the individuals tax filing due date including extensions for the taxable year in which the offset is treated as distributed from a qualified employer plan.
iii DefinitionsA Plan loan offset amount. For purposes of section 402c, a plan loan offset amount is the amount by which, under the plan terms governing a plan loan, an employees accrued benefit is reduced offset in order to repay the loan including the enforcement of the plans security interest in an employees accrued benefit. A distribution of a plan loan offset amount can occur in a variety of circumstances, for example, when the terms governing a plan loan require that, in the event of the employees termination of employment or request for a distribution, the loan be repaid immediately or treated as in default. A
distribution of a plan loan offset amount also occurs when, under the terms governing the plan loan, the loan is cancelled, accelerated, or treated as if it were in default for example, when the plan treats a loan as in default upon an employees termination of employment
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