Guest cascigm Posted July 30, 1999 Posted July 30, 1999 If a participant has a vested balance between 10,000 - 20,000. The max loan calc comes out to a loan of $10,000. If the plan does not accept collateral other than 50% of acct. balance is the max in reality lower. For eg. a participant with a 15K balance could only take a $7,500 loan.
LCARUSI Posted August 2, 1999 Posted August 2, 1999 IRS says the maximum loan in your example is $10,000. DOL says not more than 50% of the participant's vested account balance can be pledged as collateral. Therefore, if the loan will be more than $7500, sponsor must take something else as additional collateral. Sponsors don't want to do that (additional collateral), so they limit the loan to 50% vested account balance.
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