Separate Loan Policy

[Guest Iwonder]

A client has a separate written loan policy. They are concerned that if they have to amend the policy, a determination letter will be necessary. 72(p) does not specifically address this and I do not know what to point at to prove that a amendment to a loan policy is an amendment to an administrative policy and, therefore, does not need to be submitted for a determination letter like a amendment to the plan would.

Thank you for your direction.

[Guest Sieve]

1 - Not all plan amendments should be submitted to the IRS seeking a favorable determination letter, even under the most conservative of approaches.

B - Some separate written documents are, in fact, incorporated into the plan, so that an amendment to the separate document is really a change to the Plan and ought to meet any formalities required for other plan document changes. Look at this language in Corbel's prototype Basic Plan Document:"The Administrator shall be authorized to establish a participant loan program to provide for loans under the Plan. . . . In order for the Administrator to implement such loan program, a separate written document forming a part of this Plan must be adopted, . . ." (emphasis added).

3rd - What does your plan doucment say about incorporation of the loan policy? In other words, is the loan policy really administrative or is it actually part of the plan?

IV - If the policy truly is administrative, then it does not impact the Plan--unless, of course, operationally the loan policy causes the plan to violate some required provisions, in which case it will impact plan qualification. But that's always a risk with any administrative policies, and such operational qualification is a moving target that an FDL does not protect.

(v) - It's kind of difficult to prove a negative.

[J Simmons]

1 - Not all plan amendments should be submitted to the IRS seeking a favorable determination letter, even under the most conservative of approaches.

B - Some separate written documents are, in fact, incorporated into the plan, so that an amendment to the separate document is really a change to the Plan and ought to meet any formalities required for other plan document changes. Look at this language in Corbel's prototype Basic Plan Document:"The Administrator shall be authorized to establish a participant loan program to provide for loans under the Plan. . . . In order for the Administrator to implement such loan program, a separate written document forming a part of this Plan must be adopted, . . ." (emphasis added).

3rd - What does your plan doucment say about incorporation of the loan policy? In other words, is the loan policy really administrative or is it actually part of the plan?

IV - If the policy truly is administrative, then it does not impact the Plan--unless, of course, operationally the loan policy causes the plan to violate some required provisions, in which case it will impact plan qualification. But that's always a risk with any administrative policies, and such operational qualification is a moving target that an FDL does not protect.

(v) - It's kind of difficult to prove a negative.

Larry, I loved your creativeness in serially numbering your points!

Oh, BTW, I agree with your answers.

[Belgarath]

Reminds me of the SNL version of "Celebrity Jeopardy" where one of the contestants came up with a final Jeopardy answer of "Threve."

As Will Farrell would say, "Simply Stunning."

[Guest Sieve]

Threve seems like a perfectly good answer to me! Or question. Whatever.

[BG5150]

"Threve" is someone who has never been in my kitchen

(I am haiving a problem w/ my browser where I cann post after the quote. Nor can I go back an edit my post in the middle; I have to backspace to my error and re-enter every thing. Only since adopting FF 3.6!)

Threve seems like a perfectly good answer to me! Or question. Whatever.