What is the proper correction where an employer allows a loan in excess of the max permitted? Section 6.07(1) seems to allow a self correction by having the participant report on Form 1099-R, but it also states that any applicable income tax withholding amount that was requried to be paid in connection with the failure must be paid by the employer. Does this mean that participant pays income tax on the excess amount and employer pays the required withholding amount? what is the required withholding amount in this context? Thoughts?

See rev proc 2006-27