Old fashioned loan accounting

[Guest tmills]

We are taking over an old PSP that includes a mandatory after tax component. Prior to our involvement, recordkeeping has been done in-house. No participant direction. Balance forward annual statements. Plan is audited. Plan has loans that are accounted for in total as a trust asset, as things used to be 15-20 years ago, not as assets of the account of the participant taking the loan.

The trustee bank is accounting for the loans in a separate account under a master promissory note. The balance is increased when a new loan is issued, decreased to reflect principal payments. Not sure how frequently the decreases happen, but as long as everything balances at the end of the year, it shouldn't matter.

Participant statements for those who have a loan will have a note at the bottom indicating their loan balance. The participant's share of the total loan account will not be shown separately, nor wil there be any other indication of loan activity.

Loan interest is allocated to all participants as earnings, whether or not they have a loan.

There is a $100 loan fee taken from loan proceeds, but included as part of the loan amortization.

If a participant defaults (which has supposedly never happened except for terms) and offsets, at that point the outstanding balance is removed the master loan account and deducted from their balance prior to payment.

I need to know if all this sounds reasonable, is there anything to be on the lookout for, have we missed anything, etc? It's been too long since I've had to deal with loan accounting like this. Help is always appreciated.