QDRO awards all but the plan loan (asset and obligation)

[Oh so SIMPLE]

I've got a situation where a divorcing employee has ~$200k in 401k benefits. $40k of that is a loan to the employee, the other $160k is invested in mutual funds.

Employee is going to receive all the equity in their home. So, QDRO awards ex-spouse all $160k mutual funds part of the 401k benefits.

This leaves the employee with a loan of $40k and benefits of $40k. Does that render the loan improper under 72p since it exceeds 1/2 of the vested benefits (and exceeds $10k)?

[Belgarath]

Shouldn't be a problem. The 50% requirement only has to be met when the loan is first taken.