available loan funds

[cpc0506]

Plan document allows for loans from only the salary deferral money source.

Can I use the entire account balance to determine the 50% vested balance and then check to see if there is enough salary deferral to matke the loan amount?; OR

Is the 50% vested balance limited to 50% balance of the salry deferral account?

The office is divided on this issue.

Thanks for your insight.

[Lou S.]

I'm not aware of anything in 72(p) that would restrict you to 50% of the deferral account. Unless your loan program limits it to 50% of the deferral account then I would say the loan limit is 50% of total vested account balance not to exceed the deferral account total (since that is the only source they can borrow against).

[masteff]

I would say the loan limit is 50% of total vested account balance not to exceed the deferral account total (since that is the only source they can borrow against).

I concur. Once had a small plan that was the exact same way.

[pmacduff]

FWIW we also process just as Lou mentioned. our document provider loan policy says "50% of participant's vested balance" which we have always taken to be the whole account, but the participant is then (usually) limited to deferrals and rollover accounts (or whatever sources the Employer chose/chooses in the Adoption Agreement).

[BG5150]

The document we use a lot has the option of choosing whether the loan availability amount is based on total vested value, or the vested value of only the sources that are considered as collateral.

[austin3515]

Ditto to BG150 - I assume you are also using the Corbel document...

[BG5150]

Ditto to BG150 - I assume you are also using the Corbel document...

yep. for most stuff.