Loans

[Guest dstran]

A participant took a loan out of the plan for $50,000 on 2-24-05 but decided he didn't need the loan and returned the check on 3-11-05. The ptp tried to take a loan out in 1-06 but was told he had to wait until

3-12-06 to take a loan out due to the ability to only take 1 loan out in a 12-month period. Even though he returned the check, does he still have to wait a year? Please advise asap. Thanks

[stephen]

I'm interested in what others have to say but I think since he took the loan his loan maximum is $50,000 - $50,000 = 0 until the 12 months has passed. Since his loan balance was presumably still 50,000 when he paid off the loan 3/11/05 he must wait until 3/12/06 to take out a new loan. The fact that he paid it off early does not change the fact that he took the loan or that his balance was $50,000 on 3/11/05.

[Guest mjb]

Why is this a repayment of the loan if the participant returned the check without cashing it? It would be a loan if the participant cashed the check and then wrote another check to the plan for 50k. I thought that borrowing money required that the borrower accept the funds from the lender by cashing the loan check. What does the loan document/note say about when the money is borrowed?

[stephen]

Does it have any affect if the participant signed the truth in lending statement and promissory note did they take out the loan or if a loan fee was taken out off the top?