Loan never defaulted, now wants new loan

[Guest jvandyke]

We have a participant who terminated in 2000 with an outstanding loan balance. They are now rehired and requesting a new loan, however the first loan had never been defaulted.

We are going to default this loan from 2000 effective this year (2004). When processing the new loan right now, do we take into account the outstanding loan balance when figuring their availability or do we consider them having no outstanding balance since we will be defaulting this year?

Hope this makes sense. Thanks for the help.

[QDROphile]

You might consider whether or not the failure to distribute the loan in 2000 or 2001 was an operational error and see where that leads you by way of correction.

The plan is in a bit of a bind because of the mistaken handling and the current employment of the borrower. You need competent professional advice.