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"A loan will be considered to bear a reasonable rate of interest if [the] loan provides the plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances.” - I always hated this regulation. There is really no other similar circumstance in the marketplace...

Here’s the rule’s defined term for “working owner”: 29 C.F.R. § 2510.3-55(d)(2) https://www.ecfr.gov/current/title-29/part-2510/section-2510.3-55#p-2510.3-55(d)(2). (In reading the rule, recall that it’s an interpretation of ERISA title I’s definition for an employer.) Observe that an owner need not have any minimum hours of service to be treated as a working owner. It’s enough that an owner has wages from the employer or self-employment income from the deemed employer. A confusion might result from the compound question’s use of a negative and a disjunctive. And that’s ignoring the sentence’s logically inconsistent uses of plurals and singulars. Although my thinking might be worthless and is useless, I concur with your thinking that A, B, C, and D each describes a “working owner” as the rule defines that term. Is there time to ask the Office of the Chief Accountant what EBSA seeks with this question?

I suspect that this would have to be manual adjustments which makes a hard no for me

The Labor department’s rule states: “A loan will be considered to bear a reasonable rate of interest if [the] loan provides the plan with a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances.” 29 C.F.R. § 2550.408b-1(e) https://www.ecfr.gov/current/title-29/part-2550/section-2550.408b-1#p-2550.408b-1(e). And that might be a nonexclusive way to meet the statutory prohibited-transaction exemption’s condition that a participant loan “[b]ear a reasonable rate of interest[.]” 29 C.F.R. § 2550.408b-1(a)(1)(iv) https://www.ecfr.gov/current/title-29/part-2550/section-2550.408b-1#p-2550.408b-1(a)(1)(iv). But even if ERISA § 408(b)(1) tolerates an adjustable-rate participant loan, is the administrator’s service provider capable of accounting for it?