Leave of absence and 2nd loan

[30Rock]

We have a participant who took loan 1 out and then went on a leave of absence which has continued beyond 12 months. Before the first loan defaulted, she took a second loan during her same leave. Does the 12 month loan suspension for leave of absence start as of the date of the original leave, or can it start as of the date she took the second loan because she has not returned from the leave? I assume it is one bona fide leave, but just wanted to check!

Thanks!

[QDROphile]

Any question about the propriety of originating a loan during the leave?

[30Rock]

I did ask, but as long as the participant is still employed and has an account balance, then a second loan is allowed. I assume the 2nd (not the 1st) will be paid via ACH.

[QDROphile]

The question was not, "did the plan allow a second loan." Is it proper under the standards for issuing loans to loan funds to an employee on unpaid leave? Hint: A loan is not proper if the fiduciary does not have a reasonable expectation of repayment. One fact is helpful. The default did not occur before the secon loan origination. I think some unusual analysis is required to a justify a loan during an unpaid leave. A commercial lender would treat a loan to someone without current compensation as an unusual case. But I am not responding to your question, so don't feel as though you have to enage on this issue.