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If you received 1099R, your total 403b had been reduced by the 1099R and that's all what matter. Those loans, however will sill show as loans because they were never been repaid and to keep the accounting books in balance they have be recorded as defaulted loans.
If you repay those loans (if the plan allows it) you will create what is known as basis (after tax contribution that will be distributed tax free to you) and that's another reason why the loans still appear in your records. It is purely for accounting and bookkeeping purposes. You can call the plan administrator but he will most likely tell you the same thing.
All that is important is that the value of your 403B was reduced by the distribution amount.
Here's respond from couple of attorneys from a legal website that address the same issue:
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That's something you have to clear with the plan administrator if that their rules. You could also look into other options like rollover into IRA (individual retirement account) to have more control over your investment.
If you are still with the current employer, the plan may allow you to do so. Again, you have to check their rules. As long as the company selected plan comply with government laws and rules, the plan administrator can set their own rules and restrictions. If the plan doesn't allow the rollover, you may consider to reduce your contributions to 403b and maximize your IRA as well. If you leave the employment or reach 59 1/2 the plan may not restrict your access to your funds anymore.
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