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Perhaps just before, or just after, you are doing your arithmetic, please also check to see what the plan document says.

My little spreadsheet says there's $10,000 available if you can lend no more than 1/2 vested account balance. $45,000 VAB - $35,000 highest 12 mo outstanding loan.

Unless the plan has specific provisions saying the match is deposited after the end of the year, which is doubtful, then I see no problem with calculating and making deposits based on whatever period you want and then effectively truing up at or after the end of the year.

I would actually argue that it would be the opposite. The Roth conversion isn't a repayment, its another transaction triggering another taxable event. If they meant for the rule to include as backdoor Roth conversion with three years to include the amount in taxes, there would be some way to account for it, and there isn't. Repayment negates inclusion of that amount in income, and repayment of an amount already included triggers a refund.

The problem with your presentation is that his account never goes down to $55,000. It continues to be $90,000 BUT he has an outstanding loan of $35,000. The loan is an asset of the plan (or his account), so his vested balance hasn't changed. The second loan will be based on his account balance, which as noted, it the $90k number. Of course, in calculating how much is available, the outstanding loan balance (actually, highest outstanding balance in the prior 12 months, which in this case would be the full $35k) need to be taken into account in applying the maximum loan value.

Lol. No worries Austin. FWIW, I have been involved in the back and forth with DOL on this issue for many years, and it has taken a lot to get them to move this far.