The entire amount of a loan will be treated as a distribution from the outset if the terms of the loan do not satisfy the repayment term requirement or the level amortization requirement, or if the loan is not evidenced by an appropriate enforceable agreement.1
If a loan satisfies the other requirements but the amount loaned exceeds the applicable dollar limitation, the amount of the loan in excess of the limit is a deemed distribution at the time the loan is made.2
If a loan initially satisfies all of the requirements to avoid treatment as a deemed distribution but payments are not made in accordance with the terms of the loan, a deemed distribution of the entire outstanding balance, including accrued interest, generally results at the time of such failure.3