Details Title: ASPPA DC-2 Chapter 10 Key Terms Description: ASPPA DC-2 Chapter 10 Key Terms Total Flash Cards: 12 Created: 08/07/2009 11:17:17		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term Cure period Definition A cure period is a period of time during which theparticipant may make up any missed loan payments to avoid suffering the tax consequences of a deemed distribution. IRC 72(p) sets limits on the length of the cure period. Term Deemed distribution Definition "If a loan becomes taxable at the time when the participant is not permitted to take a distribution, the effect is a deemed distribution. A deemed distribution is a taxable event - that is, the taxation of a loan to the participant - but not a real distribution. " Term Defaulted loan Definition "When a participant defaults on his or her loan repayment (i.e., defaulted loan), a deemed distributino of the entire unpaid loan balance results because the repayment requirements of IRC 72(p) are no longer being satisfied. " Term Home loan Definition "A loan that is used to acquire a dwelling which, within a reasonable time, will be used as the participant's principal residence. " Term Loan offset Definition "Under IRC 72, payments of funds to a participant are presumably taxable. IRC 72(p) outlines the rules to ensure that a loan is not taxed to the participant. If these rules are violated, the loan will be taxable to the participants. If this occures when the participant is eligible to takea distribution, a loan offset will occure - that is, the loan will be considered to be a real distribution and will be removed permanently from the participant's account. " Term Qualified individual Definition "Individuals that qualify for increaed loan limits based on being effected by hurricanes Katrina, Rita and Wilma. " Term Refinancing Definition Refinancing transaction are transactions in whiich an existing loand is replaced ( or two or more existing loand are replaced) by a new loan. Term Repaid loan amount Definition "The repaid loan amount is the highest loan balane in the prior 12-month period, reduced by any outstanding loan balance at the time of the new loan. The general effect of the rule is to limit the total principal amount lent during any 12-month period to $50,000." Term Repyament period Definition "To be nontaxable, the repayment period for a perticpant loan, by its terms, must be not more than five years ( or 60 months), unless it is a princiapl residence loan." Term Replaced loan Definition When refinancing a loan the old loan is the replaced loan. Term Relacement loan Definition When refinancing a loan the new loan is the replacement loan. Term Step repayment Definition A way of structuring the amortization schedule t avoid deemed distribution under a longer-term replacement loan.