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Given what has been stated, the plan does not explicitly prohibit a loan to a participant on or going on leave. Since it is silent, it seems the plan could permit a loan to this participant. There is no prohibition in the Code for a loan being given to a participant on or going on leave. To me this would fall under the plan administrator's right to interpret the terms of the plan. As long at the loan provisions (e.g., suspension of payments, reamortization, and deemed distribution, if necessary) are administered properly, I don't see a qualification failure if the loan is provided. Once concern though is that your post states that the Plan Sponsor wants to work with this participant and permit the loan. Presumably this type of situation has never come up before (if it has, it should be treated like it was in the past). However, if the loan is approved and this situation comes up again, the loan should be made to the next participant who requests a loan when they are going on or are on leave (regardless of the Plan Sponsor's desires) as loans must be available to all participants and beneficiaries on a reasonably equivalent basis and the loans must be administered according to a uniform loan program.

They look only at the amended return. If the 5558 box is checked, they will see that the original filing was put on extension. The very short version is you don't file an extension for an amended return, but an amended return should disclose that the original filing originally was extended.

Assuming there was a 5558 filed to extend the original filing and the box was checked on the original filing, then check the 5558 box on the amended return. An amended return replaces the original filing in the EFAST2 records.

If just an "ordinary" match you can amend to stop for any match that has not yet been earned under the terms of the plan. Therefore, if changing for 2026, just need to amend prior to 1/1. There is no advance notice as far as I know.

From my experience with DOL audits, they tend to be fairly strict when it comes to the timing of elective deferrals, even for small amounts. Unlike the IRS, which sometimes allows you to rely on correction programs (like the EPCRS) with certain limits, the DOL often expects plan sponsors to correct late contributions back to the date the deferrals should have been made, regardless of statute of limitations. That said, DOL examiners will usually consider whether the amounts involved are truly de minimis and whether the plan sponsor acted in good faith once the issue was discovered. Since you already corrected the deferrals from 2000 onward and the amounts for 1999 are small, it may be possible to negotiate a resolution that limits the liability or reduces penalties. Having thorough documentation showing your intent to comply and the steps taken to correct the issue helps a lot in these discussions. In practice, many small companies end up paying the owed contributions for the earliest period if the amounts are minor, but you can often avoid additional penalties if you demonstrate prompt corrective action and cooperation. Essentially, it’s a balance between minimizing administrative burden and satisfying the DOL that you are acting responsibly. A good approach is to provide a clear explanation of your correction process, the relative size of the 1999 amount, and ask if they would consider this sufficient to close the issue. Often, they will be reasonable if the amounts are small and there’s a documented good-faith effort.

I have not seen a situation like the one Lou S. describes. But that’s because plans I work with use a recordkeeper’s nondiscretionary computer-based procedure to approve or deny a claim for a participant loan. A participant’s request either is in good order with the rules the plan’s administrator instructed the recordkeeper to apply, or is NIGO and denied. There would be no human discretion, and the computer would lack information about a future leave. (The loan-application form has the claimant state every fact and every promise needed to follow the plan’s loan provision and procedure, and state everything under penalties of perjury.) If I were the human deciding for a plan’s administrator (and assuming I had caused the plan’s sponsor to revise the plan’s governing documents and written procedures to my satisfaction before I hypothetically consented to serve), I would not deny an otherwise sufficient claim for a participant loan merely because the participant will soon be on an approved leave if the administrator lacks knowledge that (i) the participant does not intend to repay the loan, or (ii) the participant won’t return to work soon enough, or her pay won’t be enough, to reamortize and repay the loan as the I.R.C. § 72(p) rule calls for. I recognize that claims procedures I’m used to can take on extra difficulties when a plan’s administrator (often impractical to separate from the employer) has too much information about the participant. This is not advice to anyone.

Read the plan document and the loan promissory note very carefully. There can be a difference between being eligible to take out a new loan while on medical leave versus being able to suspend repayments of an existing loan due to going out on medical leave. This difference may be buried in provisions that say there has to be a reasonable expectation at the time the new loan is taken that the loan will be repaid through payroll deductions. How medical leave plan works also may factor into the decision. Is the participant while on leave receiving pay from the company, a short term leave plan or a long term leave plan, and is any of this considered plan compensation? It may be unlikely but it may be possible for the source of these payments be a factor to consider. Some plan provisions may require a participant to be unable to make the loan repayments in order to qualify for the suspension. There also is the issue whether, by permitting this loan, the plan sponsor is creating a precedent that other participants who are on other types of leave could use to take out new loans. It also would be helpful to clarify the role of the participant versus role of the plan sponsor in invoking the suspension. It would seem the plan would say whether the participant medical lease has the right to suspend repayments, and the plan sponsor just needs to administer the plan's loan provisions.

Since this thread is 20 years old, one can only hope that it has been resolved by now...