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Barring any language to the contrary, the plan's loan policy document governs the making of new loans. So the receiving plan could accept the two loans as a rollover and then not permit the participant to take another loan until those have both been paid off. I suppose the receiving plan could limit rollover contributions to no more than 1 loan, if desired. This would probably have to be spelled out in the document though.

Jpod did not misunderstand. In the post that Jpod is questioning you said terminated employees (There are certain industries where this is commonly extended as a courtesy to terminated employees, who remain "employees" while they search for a new job.), not employees who are in danger of losing their job. In another post you discuss having terminated employees paid a minimum wage.

My view is that if the individual's status is not clearly within the 4 corners of the policy (fully insured group or stop loss, which will wrap the SPD), you have a potential for claims to be denied if they are large, and for employer to be stuck in the middle, having promised something to the "employee" that an insurer won't pay for. Usually I tell client that they need to disclose in a letter to the insurer how they are interpreting "employee" to include this person.

It just is.