Loan to Party in Intererst

[TPA Bob]

Plan with two participants, husband and wife. Had prior participants but have all been paid out. Assets in Plan about 1,100,000.

Plan loans $200,000 to husband for 6 weeks (until construction loan approved on vacation home in Mexico), is repaid with fmv interest.

Other than the excise tax for the prohibited transaction, any other repercussions to be concerned with? I do not think the loan proceeds are considered a distribution that makes it taxable. Is this a qualification issue?

[Ron Snyder]

What part of Mexico?