Plan Loan to Former Employee now back in service

[Guest newtobenefits]

Heres the scenario.

Employee has 401K plan with Company A. Employee leaves company A to go to work for Company B. He leaves his 401K plan with Company A. Ultimately Company A aquires Company B and so Employee is back in service at Company A. He now has a 401K plan with Company B that will remain separate. The payroll systems of Companys A and B are still separate. Is Company A obligated to allow Employee to take a plan loan from the 401K plan he has with Company A pursuant to DOL language that loans must be "available to all such participants and beneficiiaries on a reasonably equivalent basis". I know the DOL has said that loans can be limited to parties in interest making it so that companies do not have to make loans to former employees. By being back in service wouldn't he be a party in interest again?

Thoughts?

[J Simmons]

Does the plan now specify that service with Company B (or other controlled group entity) counts for purposes of the plan and being a participant of the plan? If so, then yes, when he resumed/resumes being a participant. If the plan only recognizes service with "Company A" proper for purposes of being a plan participant, then likely no.