Hi - We have a plan which gave a loan out to an employee who promptly did not make one payment. So the loan is now in default. When do the earnings stop accruing? At the end of the cure period or do we continue to accrue intil we deem the distribution? Thanks for any insight/direction!

Keep accrueing the interest forever.......

But at the end of the cure period is the amount used on the 1099 reporting the deemed distribution as taxable.

However you keep accrueing interest until there is a distributable event. You track the interest because the laon balance reduces the $50,000 available to this employee for another loan. Treas reg 1.72(p)