Multiple plan loans

[mariemonroe]

Plan permits loans (max of 2) and hardship withdrawals.

Participant has 2 loans outstanding and needs more money but doesn't fit within hardship safe harbor.

One of participant's loans has a balance of $200.

Can participant simply repay the $200 loan and take out a new loan in the larger amount he needs (subject to the limit on loan amounts)?

Or (assuming the plan permits this) can participant refinance one of his loans to add the larger amount to the current loan balance?

Is there any practical difference in these two options?

[Jim Chad]

I have never seen anything in a document or loan policy that would prevent a Participant from paying off the loan early. It is done quite often. If there is nothing in your document or loan policy that prevents early payoff, I would think this would be fine.