Loans to sponsor

[Guest JPIngold]

I have a plan with a participant whose spouse owns the stock of the sponsoring corporation. He is 65 years old and skiddish about the market and has $400,000 in cash. The corporation needs an operating line for some projects that are on the horizon. Is it a valid investment to loan the corporation money at market rate or is that an implied participant loan and anything in excess of $50,000 would violate the loan provisions???

[Guest JPIngold]

Never mind ---- found it in Sal's book. Have a disqualified person issue through attribution and a substantially owned business ... so the best I can do is have him borrow $50,000 individually and loan it to the corporation.