Plan Loan and Change in Controlled Group status

[PensionPro]

Participant takes 50k loan from two plans sponsored by unrelated employers.  Subsequently, the unrelated employers become a controlled group, and now the participant has loans that exceed 50k from the new controlled group.  Is there a violation and how to fix it?  My initial thought is there is no violation, but want to get other opinions.  Thanks.  

[Bri]

I believe it's the lending of the money outside the Sec. 72 parameters which specifically gives rise to a prohibited transaction - which is why the 50k limit would be there in the first place. 

But your guy didn't do that either time. 

(I vote for "you're fine.")

[chc93]

3 hours ago, Bri said:

I believe it's the lending of the money outside the Sec. 72 parameters which specifically gives rise to a prohibited transaction - which is why the 50k limit would be there in the first place. 

But your guy didn't do that either time. 

(I vote for "you're fine.")

Isn't the Sec. 72 parameters only effective when the loan is taken?  Like taking 50% of the vested balance, and some short time later due to market losses the loan is now more than 50% of the vested balance... but I thought this situation is OK since Sec. 72 parameters were not exceeded when the loan was taken.  So I think I vote "you're fine" too.

[PensionPro]

Thank you both.  72p does say that the 50k limit is applied at the time the loan is taken, so I think we are fine too.