Can the 401(k) portion of a KSOP hold a note?

[Guest KoreAmBear]

I am wondering for the non-ESOP portion of a KSOP, would holding a note similar to the ESOP's put option total distribution + a 5 year note provision -- be a PT? In other words, are all parts of a KSOP subject to ESOP rules?

Corollary question: if a participant in a 401(k) has some closely held employer securities, upon lump sum distribution, could the Plan issue cash + a employer's note? Or, could a PT be avoided by issuing a lump sum in-kind distribution? But then how would the repurchase work?

WL

koreambear@yahoo.com