Office Manager took out max loan from plan in early 2009, then resigned before any payments were made. Plan does state that loan is in payable in full upon termination of employ. He has not requested distribution, but I am guessing that he still needs 1099-R on defaulted loan. Or, does the loan continue to accrue interest until he takes a distribution?

Thanks

Sounds like it probably defaulted on June 30 or earlier; check the loan policy to determine the date of default and use the value on that date.