401(k) Loan

[Alex Daisy]

Is a Plan Termination an event that would automaticially cause a participant to be in Default of his Loan? of just an trigerring event that will cause the loan to automaticailly become due and payable?

[ERISAnut]

No. But the actual payout of the participant within the 12 month period will create a loan offset (where this participant may still come out of pocket within 60 days from the distribution and roll it over).

Plan termination will typically cease contributions (but loan repayments are not contributions).

[Guest Sieve]

You should see if there is any plan or loan document language that would control the loan treatment, and availability of lump-sum payoff, at plan termination. But the law/regs do not require a default or an acceleration.