Without providing too much detail as this is an ongoing review, what options would a plan administrator have if it were found that loan from 2020 should have been distributed as a covid hardship withdrawal? Plan does not allow for multiple loans at one time however a participant was somehow able to take about two loans less than 10 days apart.
somehow the participant had two active loans that went delinquent as not enough money was coming out of paycheck to cover both.
the first was a loan and the second should have been a covid hardship as it had to be done over the phone. Our participant tried fixing the issue and has since learned the second “loan” would be considered a hardship withdrawal and will need to amend their taxes.
If we find this was a systems error on the plan side and it was not done correctly, would this hold up that the record keeper did not follow our plan and we should ask to recoup some of the fees and penalties for this participant?
thank you
