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Did another person adopt the child? Did the father legally release his parental rights? If so, then I think family attribution is broken. (Just like an adopted child gains rights). Tough questions to ask, but necessary. Just a name change is not enough.

The trick is to find the more precise definition than the semi-vague "benefiting". IRS Code 401(k)(11)(C ) "Exclusive plan requirement The requirements of this subparagraph are met for any year to which this paragraph applies if no contributions were made, or benefits were accrued, for services during such year under any qualified plan of the employer on behalf of any employee eligible to participate in the cash or deferred arrangement, other than contributions described in subparagraph (B)." My opinion is that loan payments are NOT contributions nor accrual of benefits and therefore would not violate this rule.