Aggregating Rollover Amounts in a DB Plan in Determining Plan Loan Amount

[Guest Edward McElroy]

If a participant in a DB Plan is 100% vested in a $10,000 accrued beneft in the DB plan and the participant rolled an additional $90,000 from either an IRA or a DC plan into he DB plan, is the participant able to borrow $50,000 from the DB plan?

I think the answer is yes, but I didn't see any authority on this.

Thanks in advance.

Ed

[Blinky the 3-eyed Fish]

Yes, there is no prohibition about a loan being secured from a rollover source.

[Guest Edward McElroy]

I understand that, but I was concerned that the one-half of a participant's nonforfeitable accrued benefit under the plan limit under Code Section 72(p) applied in to the accued benefit earned under the DB plan. For example, if a participant had only contributed $50,000 to a DB plan, but had an additional $50,000 rolled over from another tax-deferred vehicle, then for funding purposes only $50,000 has been contributed, but for 5500 purposes plan assets are $100,000.

[Blinky the 3-eyed Fish]

Me saying that the loan can be secured by the rollover source is akin to saying that the rollover balance counts toward determining the vested benefit. He has $100,000 and therefore can take a $50,000 loan.