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Loan payment after plan termination


Guest nlamorte

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Guest nlamorte

Company X is terminating their DC (401(k)) Plan and there are outstanding loans. Can employees continue to pay back their loans after the plan termination date, up until assets are distributed? The company will still exist after the plan temrination and will still be issuing payroll checks from which the loan payments would be made (plan also allows for check payments, so payments may also come directly from participant). I cannot find anything in the plan document that governs this and am still looking for the separate loan policy. The bigger question is whether I'll even find anything in the loan policy - i.e. is this even up to the plan sponsor, or do the IRS regs specify whether or not this is allowed?

Need answer asap - thanks!!!

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I would continue to accept loan payments. The plan being "terminated" doesn't necessarily mean all activity ceases; certainly contributions. But until assets are distributed, the plan still exists and financial transactions, other than contributions, can continue.

Ed Snyder

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