Suspending loan payment while on leave of absence?

[Guest A_Dude]

Can a particpant take a loan, and suspend making loan payment while currently on a leave of absence?

The regualtions and plan loan policy address if the participant were to go on a leave of absence and have a loan for suspending loan payments. But, is it different if the particpant is currently on a leave of absence, wants to take a loan out, and suspend payments?

Thanks in advance for all you input on this issue.

[QDROphile]

The plan should have terms to the effect that the plan must determine that the loan is expected to be paid before making a loan. Usually that is an easy determination because the plan will require the loan to be paid through payroll deduction. The determination is not so easy when the employees is on leave and there is no pay to serive the loan debt. That could be the basis for a policy or a conclusion that a particant cannot take a loan while on leave.

[Guest A_Dude]

Thanks, I like where you are going. However, I'd still wish to continue the discussion...

I would still appreciate anyone eleses input on the matter. Especially, if the loan were to be approved, could the particpant still defer the payments under the leave of absence rules?

Let's make the assumption going forward the participant has indicated there ability to service the loan payments, the loan request will be approved, the particpant is currently on a leave of absence.

[QDROphile]

If there is an ability to pay the loan without compenstion from the employer during the leave, then the loan payments should not be suspended during the leave of absence. That will be the proof of the assertion.

[pmacduff]

FWIW our plan loan policy states that loans are available to "active" participants, so IMHO someone on leave would not be considered "active".

[Guest A_Dude]

The loan policy does not distinguish employment status. It states that one must only be a participant to be eligible.