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There is no prohibition in the code or regs from taking a loan from a rollover source of funds. The plan document and/or loan program may place restrictions on the source(s) of funds that may or may not be eligible for loans.

I'd be very surprised if the plan document doesn't somehow address this, although it might be "sideways" and require some cross-checking, particularly if the document isn't in an Adoption Agreement format. It is clearly permissible for a 401(k) plan to allow rollover money to be used for loan purposes. If the document TRULY does not address this in some form, one way or the other, then it is the responsibility of the Plan Administrator to make the determination of what is and is not allowable under the written terms of the plan.

There is no 0% for anyone with greater than 1 year of service. Good Luck!

This isn't adding up for me. If the plan designated OP as the AP 15 years ago and continues separate accounting of the assets now, they must have already received an order. Surely this was not a unilateral decision...

I would agree that 0 participants should be OK if forfeitures are used to defray remaining expenses of the plan. However, if the forfeitures are an accrued benefit to participants, I'd be hesitant to indicate 0. It would seem more appropriate to determine the number of participants requiring allocation of forfeitures under whatever method is to be applied for allocation purposes.

The answer is a definite MAYBE. The following is from Natalie Choat's authoritative book (the bible on this stuff) which every firm needs to own (this is from the on-line version which I pay good money for and it is worth every penny, and it's NOT that expensive. The estate or trust attorney needs to be involved in making this determination. Trust beneficiaries complicate the whole RMD determination. IRS regulations allow a trust named as beneficiary of the plan or IRA to qualify for this favorable form of payout (stretch out) if certain requirements are met. These requirements are usually referred to as the “IRS’s minimum distribution trust rules” or the “see-through trust rules”. The person primarily responsible for verifying that the trust qualifies as a see-through trust is the trustee of the trust named as beneficiary. The trustee is the one who must comply with the minimum distribution rules by correctly calculating (and taking) the annual required distribution. If the trustee fails to take a required distribution the trust will have to pay the resulting 50% excise tax. § 4974(a). It is highly recommended that the trustee of a trust named as beneficiary of a retirement plan obtain a legal opinion regarding the trust’s qualification as a see-through trust (or not). This will show (in case of any challenge by the IRS) good faith effort to comply with the tax rules, or (if the opinion is that the trust does not qualify as a see-through trust) shield against a possible beneficiary claim that the trustee should have used the life-expectancy payout method. The Code allows retirement plan death benefits to be distributed in annual instalments over the life expectancy of the participant’s Designated Beneficiary. § 401(a)(9)(B)(iii). Although the general rule is that a Designated Beneficiary must be an individual, the regulations allow you to name a trust as beneficiary and still have a Designated Beneficiary for purposes of the minimum distribution rules: If the trust passes several rules, it is considered a look-through or see-through trust, and the individual trust beneficiaries are treated as if they had been named directly as beneficiaries of the plan or IRA—for some, but not all, of the minimum distribution rules. The five “RMD trust rules.” Reg. § 1.401(a)(9)-4, A-5(b), contains the IRS’s four “minimum distribution trust rules” (also called the RMD trust rules): 1. The trust must be valid under state law. 2. “The trust is irrevocable or will, by its terms, become irrevocable upon the death of the” participant. 3. “The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s benefit” must be “identifiable...from the trust instrument.” 4. Certain documentation must be provided to “the plan administrator.” If the participant dies leaving his retirement benefits to a trust that satisfies the above four requirements, then, for most (not all!) purposes of § 401(a)(9), the beneficiaries of the trust (and not the trust itself) “will be treated as having been designated as beneficiaries of the employee under the plan….” Reg. § 1.401(a)(9)-4, A-5(a). However, treating the trust beneficiaries as if they had been named as beneficiaries directly does not get you very far if the trust beneficiaries themselves do not qualify as Designated Beneficiaries. Accordingly, Rule 5 is that: 5. All trust beneficiaries must be individuals. The IRS calls a trust that passes these rules a see-through trust, because the effect of passing the rules is that the IRS will look through, or see-through, the trust, and treat the trust beneficiaries as the participant’s Designated Beneficiaries, just as if they had been named directly as beneficiaries of the retirement plan, with two significant exceptions: First, “separate accounts” treatment is never available for purposes of determining the ADP for benefits paid to multiple beneficiaries through a single trust that is named as beneficiary; Second, a trust cannot exercise the spousal rollover option, even if it is a see-through. Reg. § 1.408-8, A-5(a). Hope the above helps you.

thanks! That's pretty much where we are. But I did find out from our FSA TPA that they had been sending all notifications/requests to her work email (from which she terminated about a year ago!) I am not sure why it took them a whole year to send us the information but they did show me where on their system I could look for future issues to catch it earlier (not sure exactly what we are paying them for -- this is the 2nd "large" incident with them and I hope to change at plan year end to a different vendor) They were totally unwilling to give any (non-legal) advice....