Below market rate of interest - Plan Loans

[J. Bringhurst]

If loans to participants from a qualified plan were otherwise set up correctly per the terms of the plan's loan policy but failed to apply the plan's interest rate for loans (e.g., prime +2%) and, further, applied a rate that would be considered below market, is correction available under the Voluntary Fiduciary Correction Program (VFCP)?

In taking a look at Section 7.2 of VFCP, which provides for correction of loans at below-market interest rates to parties-in-interest, the example is not exactly on point (i.e., it describes a 30-year mortgage loan secured by a Deed of Trust) and the correction involves the establishment of a corrective interest rate using an independent commercial lender (rather than just correcting at the plan's normal loan rate). So, before going down this route, I really want to make sure that VFCP is applicable.

In addition, it also seems that there is no correction for this under EPCRS, which only provides a few situations (e.g., default) for which correction can be made under the streamlined procedures.

I think we're definitely in ERISA-land, because the loan was not good when made (i.e., both the loan documenation and the loan itself reflect the below-market interest rate) rather than a simpler matter of the loan documentation being good and the repayment amounts simply being too small due to the incorrect rate.

Thanks in advance.