Universal Availability For Plan Loans

[CLE401kGuy]

Loans from the 401k plan must be permitted on a reasonably equivalent basis... can the loan provision be temporarily relaxed for perhaps a period of 30 days and then "changed back"

here's the story:

Valued NHCE needs to get a loan to make a car purchase

Plan only permits hardship loans

Sponsor wants to give the car loan to just this one NHCE

Based on reasonably equivalent rules - the plan could / would be amended to temporarily allow the loan for anyone who needs a 'car loan' for the 30 day period - then amended back to require hardship

Does that seem kosher? (not what I'd recommend but is it ok within the framework of the rules)

[Jim Chad]

Maybe the employer wants to define hardship to include car purchase. I think for loans, hardship is defined the way loan policy defines it rather than IRS.

[MWeddell]

The same question also is being discussed at http://benefitslink.com/boards/index.php?/topic/55420-loans-hardship-only/