Spousal consent for loans--balance question

[BG5150]

Plan calls for SC for loans with balance over $5k.

So, if the balance is $6,500 and they want a loan for $3,000 I still have to get SC, right?

[CuseFan]

Yes, if the document reference is to the account balance.

[Bri]

What if the sponsor plans to update spousal consent from 5k to 7k with the SECURE 2 amendment?

[Peter Gulia]

The Internal Revenue Code’s regimes and remedial-amendment periods about whether a plan is tax-qualified assume “the” written plan.

ERISA § 404(a)(1)(D) recognizes that a plan’s provisions might be stated by “documents and instruments[.]”

Imagine the plan’s sponsor/administrator sends its third-party administrator or recordkeeper an email to inform the service provider that the sponsor has changed the plan’s involuntary-distribution threshold from $5,000 to $7,000, and has changed the plan so a participant loan from a participant’s account less than the plan’s involuntary-distribution threshold does not require a qualified election with the spouse’s consent. Imagine the email’s sender is someone who has authority to amend the plan.

Consider whether that email might be a “document[] . . . governing the plan” within ERISA § 404(a)(1)(D)’s meaning.

This is not advice to anyone.

[Gilmore]

Just to clarify the original question.  Do the loan procedures require spousal consent if the participant's account balance is greater than whatever amount is specified for spousal consent, or is spousal consent required if the loan balance is greater than the spousal consent amount?  If the latter, then would a $3,000 loan still require spousal consent if $5,000 is the threshold?

[C. B. Zeller]

It's based on the total account balance, not the amount of the loan. See 1.401(a)-20 Q&A-24