Loan exceeds 50%

[bhodge113]

I have a large plan that is audited for 2022.  A participant requested a maximum loan ($13000) from his account on a weekend.  The account balance he saw online was $26,406.45.  By the time the loan was approved and processed, his account had fallen to $25,851.50.  It appears that he is over his maximum loan amount by $74.25.

I looked at the IRS Fix-It Guide and found that the participant must repay the excess loan amount and if needed amortize the remaining principle. Is there anything else i need to be doing?

 

[bhodge113]

Confirmed this can now be self corrected -

The answer changed with SECURE 2.0 and Notice 2023-43.  Specifically, Section 305(b) of SECURE 2.0 allows participant loan failures to be self-corrected under the rules of EPCRS section 6.07. The Notice, at Q&A 3, confirms that errors such as this can now be self-corrected, whereas before they could only be corrected under VCP.