Lienable

[kgr12]

After speaking with their third party administrator, an employer said that with respect to plan loans they were going to make one type of subaccount "lienable," but not "loanable." I know that it not being loanable means that you can't take loans against that subaccount, but I'm not sure what making the subaccount lienable actually entails. Anyone familiar with this terminology and know what the distinction is?

[MoJo]

After speaking with their third party administrator, an employer said that with respect to plan loans they were going to make one type of subaccount "lienable," but not "loanable." I know that it not being loanable means that you can't take loans against that subaccount, but I'm not sure what making the subaccount lienable actually entails. Anyone familiar with this terminology and know what the distinction is?

It simply factors into the calculation for determining the amount of the loan that a participatant can take. While the "lienable" money will cound for determining the 50% of the vested balance borrowable amount, not being loanable means that the participant must have the amount they want in other sources/accounts. I've seen sponsors say employer contributed monies (match, profit sharing, etc.) are "lienable" but not lonable, meaning that you apply the limit to the whole account balance, but the participant is further limited only to the balances in the loanable buckets.