When your loan was taken out you signed a promissory note that required you to make monthly payments. If those payments have not been made pursuant to the agreement then the loan is in default.
A loan that is in default is generally treated as a taxable distribution from the plan of the entire outstanding balance of the loan. You would then receive a 1099-R at the end of the year.
Your loan may allow for a “cure period” that would allow you to make up for a missed payments. It also may allow for suspended repayments for a leave of absence. But it may not extend the loan’s maximum repayment period.
So there may be two options at this point:
• You can leave the loan in default and it will be an assumed deemed distribution. In this case, a 1099-R will be issued at the end of the year and loan will be taxable; or
• The loan can be re-amortized over the remaining period. This cannot exceed 5 years.