Maximum Loan Availability

[Guest mmaggs]

Good Afternoon,

Our plan has a historical frozen 401(k) that allows for loans and a currently active 403(b). We became a non-profit some years back.

My questions is this - If a person takes a $50,000 loan on the 403(b), should they then be able to take an additional $50,000 loan on the frozen 401(k)?

It seems our recordkeeper's system allows for this, and my understanding is $50,000 was the maximum loan between all employer's plans, and not by themselves. Please correct me if I'm wrong.

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[ETA Consulting LLC]

You are correct. You know, you can program a computer to say 2 plus 2 equals 5. The key here is to ensure the rules are adhered to despite the programming deficiencies. From a programming perspective, it's difficult to apply one set of parameters (loan availabiltity) accross more than one plan. It will likely require manual intervention to ensure this is administered properly.

403(b) and 401(a) plans are treated as separate for some purposes (i.e. 415 limits), but that doesn't extend to loans.

Good Luck!