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Fascinating. So, a couple of ERISA attorneys think that the 12% might be justifiable. I'm not at all trying to be snide or sarcastic here - I'm truly interested in how this might be possible, so can you educate me a bit on situation(s) where it might be deemed reasonable, or, whether "reasonable" or not, that you think the DOL would accept? Thanks.

I think the reason for allowing plan loans without it being a PT or a taxable distribution is because a loan feature is viewed as a necessary evil to encourage retirement plan savings, just like hardship distributions.

I think you may have missed my point. HCEs don't have to take a 12% loan since they surely have access to standard rates through a normal lender. NHCEs may have poor credit, meaning that it's either the plan or another loan shark if they need to borrow. And I have to agree with Belgarath - the plan either allows loans or it doesn't. The sponsor is not allowed to "want to discourage" anything. If they don't want participants to take loans, the plan should not allow them. Permitting loans is not a required feature, right?

Shouldn't a plan sponsor understand banking (or hire a banking expert advisor) before offering to administer loans? (Sorry for ranting. I couldn't hold it any longer.)

This is something to discuss with counsel. The IRS rules are murky at best. In general, a separate retiree plan is not specifically exempt from nondiscrimination testing but there may be ways to structure it so it works.

over the years I've ended up with a number of these. I think maybe 14 or 15, saved here and there on the computer. what a disorganized mess I have. Here is one of the Beatle's songs. 'They' did a song for both 401k plans and another for DB plans so I'll have to find the files for that version as well The Beatles - Yesterday Yesterday, sixty-five it seemed so far away Now it’s come today, it’s here to stay I wish I had a 4-0-1 k Suddenly, I’ve not half the cash I used to see The bill collectors shadow me Retirement came suddenly My sa-vings are so low, I don’t know just where I’ll stay I did something wrong, should have saved and put away 4-0-1(k)s, oh it’s such an easy way to save now I need a place to hide away and it’s too late for a 4-0-1 k My sa-vings are so low, I don’t know just where I’ll stay I did something wrong, should have saved and put away 4-0-1(k)s, oh it’s such an easy way to save now I need a place to hide away and it’s too late for a 4-0-1 k Mm mm mm mm mm mm mm good yesterdy.mid

And my own version: Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.