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I have a brief question concerning 401K loans. Account has over well 100,000 in value. Employee takes out loan . Employee takes 12 month leave of absence. At X % the loan amount increases to 49,000. upon his return the employee, on the same day, pays off the balance and takes out a new loan. Seems as though there are two steps: Determine the allowable amount of loan and Ensure that the loan, upon issuance, does not exceed allowable amount. USING THE FOLLOWING: (i) $50,000, reduced by the excess (if any) of— (I) the highest outstanding balance of loans from the plan during the 1-year period ending on the day before the date on which such loan was made, over (II) the outstanding balance of loans from the plan on the date on which such loan was made, or (ii) the greater of (I) one-half of the present value of the non-forfeitable accrued benefit of the employee under the plan, or (II) $10,000. 50,000- (49,000-49,000)=50,000 I guess that you could argue that the outstanding balance at any point during the day was either the 49,000 or the new loan amount of 50,000.. but never both. Or , the 49,000 on the day of the loan plus the 50,000 of the new loan: 50,000-(49,000-99,000)= 100,000, which is then limited to 50,000. Alternatively, if the loan was paid off the day before, you could argue that upon issuance of the loan the outstanding balance for the day is 50,000 Resulting in 50,000-(49,000-50,000) = 51,000 which is then limited to 50,000. I guess my point is there seems to be no reference as to timing or time of day. Once issued a loan balance is "outstanding". So really the limit is that the combined amount is 50k. As for step two, knowing the first loan is paid, allows for the issuance of the second loan. Let the comments begin.