Leaderboard

If the plan is ERISA-governed, no. ERISA § 408(b)(1) “exempts from the prohibitions of section 406(a), 406(b)(1) and 406(b)(2) loans by a plan to parties in interest who are participants or beneficiaries of the plan” only if, with further conditions, “such loans [a]re available to all such participants and beneficiaries on a reasonably equivalent basis[.]” 29 C.F.R. § 2550.408b 1(a)(1)(i) (emphasis added) https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-F/part-2550/section-2550.408b-1#p-2550.408b-1(a)(1)(i) Otherwise, a participant loan is a nonexempt prohibited transaction.

The rule is that you use the balance on the last valuation date in the calendar year immediately preceding the distribution calendar year, with adjustments. For the 2021 distribution calendar year, you would use the account balance as of the 9/30/2020 valuation date. Increase it by the amount of any contributions allocated to the participant's account, or decrease it by the amount of any distributions made from the participant's account between 10/1/2020 and 12/31/2020.