Jump to content

issuance of a loan for divorce


Recommended Posts

I have a participant that is requesting a loan.

He indicated it is for a divorce.

The plan does not require spousal consent

We do not have a DRO.

is there anything that would restrict him from taking the loan at this time?

Thank you!

Link to comment
Share on other sites

Check the QDRO procedure in your plan document. Many of them say something to the effect that the Plan Administrator "may" put a temporary hold on distributions/loans if they have reason to know that a divorce/QDRO is pending. This can be a tricky area - you may need to check with ERISA counsel depending upon facts and circumstances, timing, etc.

Example: Suspension of Participant distributions or loans. If the Administrator is on notice (verbal or written) regarding a pending domestic relations action (e.g., a divorce) and has a reasonable belief the Participant's account may become subject to a QDRO, the Administrator may suspend processing the Participant's distribution or loan requests pending resolution.

Link to comment
Share on other sites

On 5/6/2024 at 2:30 PM, QDROphile said:

As they should. And the administrator should respect that line.

Indeed.  I never understood why a document would refer to knowledge or "reason to  know" of a pending divorce.  Absent something actionable (like A will get X% of B's assets), how is a plan supposed to deny something a participant is entitled to?



Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...