Calculating 50% of account value for max loan

[pensiongeek]

With this date of constant market fluctuation, what is considered 50% of the balance to take a loan?  Is it the date the loan was requested, approved, or processed?  Below is what is says in code section 72(p).  I have a participant who requested a max loan on 3/9 and we are processing it today.  Of course, the balance is way less today, so his loan availability is much less today.  Would it be appropriate to process it today for the balance requested on 3/9 because it was 50% on the date he requested it?

[Bill Presson]

I don't think so. But if he can wait a few days, the legislation currently being worked on increases the amount to $100k or 100% of the account. But it's not done yet.

[pensiongeek]

@Bill-  so you agree it should be no more than 50% on the date we approve it?

[Bill Presson]

44 minutes ago, pensiongeek said:

@Bill-  so you agree it should be no more than 50% on the date we approve it?

I just know there are issues and it's been asked on here a lot. Will the RK even issue the check?

[Larry Starr]

4 hours ago, pensiongeek said:

With this date of constant market fluctuation, what is considered 50% of the balance to take a loan?  Is it the date the loan was requested, approved, or processed?  Below is what is says in code section 72(p).  I have a participant who requested a max loan on 3/9 and we are processing it today.  Of course, the balance is way less today, so his loan availability is much less today.  Would it be appropriate to process it today for the balance requested on 3/9 because it was 50% on the date he requested it?

 

No. It's the balance when you make the actual loan.  And that balance is tied to the definition of valuation date.  So it may be that, if it is not a daily val plan, an interim valuation may be appropriate.  Just another reason why we have very few plans that allow loans!

[JOH]

Larry is right, it's the balance as of the date when the loan is made.  I would say the loan is made once the loan note has been executed.

Regarding the 100% availability for loans, currently, that specific to "qualified individuals"(i.e. those diagnosed with COVID, spouse or dependent, those who suffered financial loss to loss of wage due to COVID-19, etc...).