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See also DOL Secretary Acosta's article, in today's Retirement Plans Bulletin: https://benefitslink.com/newsletters/2018/2018_08_31_retirement_bulletin.html (Folks are invited to subscribe to the free daily BenefitsLink Retirement Plans newsletter, including bulletins, use this URL:) https://benefitslink.com/cgi-bin/secure/sub.cgi?l=9 News items from previous newsletters, about multiple employer plans (MEPs) or pooled employer plans (PEPs): https://benefitslink.com/search/results.php?textQuery=%22multiple+employer+plans%22+OR+MEP+OR+MEPs+OR+%22Pooled+Employer+Plans%22+OR+PEP+OR+PEPs&datasource=MYDB&sort=2

I would not ignore the loan. Taking a loan in excess of the 72(p)(2)(A) limit results in a taxable deemed distribution. I don't see an exception in the regs for this situation, so the prior loan balance counts in the calculation. Ignoring the loan would mean intentionally treating a taxable amount as not being taxable. There is an unpleasant term for that. In this case, it's don't make the participant's problem your problem. The participant could have held the loan proceeds, made the scheduled payments and used the remainder when they found another house. Suppose you do ignore the rules in this case? What about a participant who borrows to pay for his daughter's wedding and it gets cancelled after the loan? Will you do the same if they reconcile and get married a few months later? What about a loan to fund college expenses when the student drops out after the loan and then goes back the next semester? I could come up with more examples, but you get the idea.

The good news is that the client loves his employees, had a great year and will contribute >3% to all for 2017 and most likely 2018. Will go with Safe-Harbor 3% Non-Discretionary for 2019. This, of course, is an unusual situation.

I know this doesn't exactly speak to the technical issues, but I've become disheartened over the years seeing these plans installed and blown up in the first couple of years. I know many of the skilled consultants anticipate these types of issues during the plan design phase and implement plans that avoid these issues. Unfortunately, many do not. Just venting a little frustration.

Gambling and professional sports? What could go wrong?