Loans & Hardships

[Felicia]

If a non-ERISA Title I plan permits loans and hardship safe-harbor withdrawals, is the custodial obligated to advise participants that they must first take a loan from the plan?

[Guest Brent Rowell]

Not legal just a practical opinion

I do not believe a loan is required

Logic: Employee knows that loan cannot be repaid and would face tax penalties for the withdrawl as failure to pay loan.

Not only would employee face 10% penalty but also potential damage to personal credit

Hopefully the employee is getting advice on which way to go