In-service 59 1/2 with loan balance

[Guest donna319]

A participant has a loan on their 401(k). They are eligible for a in-serivce withdrawal. Is loan security required before processing an in-service withdrawal after 59 1/2?

[Guest Sieve]

No. Security is adequate (using no more than 1/2 of the vested account balance) as of the date of the loan. But, an in-service distribution should be made exclusive of the loan (which ought to remain outstanding).