A plan subject to the J & S rules has a loan provision. Is a waive

[Guest MES]

A plan is subject to the J & S rules. The same plan has a loan provision. Is a waiver of the QJSA required before a loan may be issued? The regs indicate that spousal consent is required, but only state that it: 1)must be in writing, 2)acknowledge the effect of the loan and 3)must be witnessed by a plan rep or notary. (Treas. Reg. 1.401(a)-20, Q-24) I have been told that the waiver must be completed due to the possiblity of a later deemed distribution or offset. I think I disagree. Any opinions?

[KJohnson]

The reg provides that consent must be obtained "at the time the accrued benefit is used as security for the loan". Also, that consent is subject generally to 417(a)(2). Thus, I would think that consent must be obtained at the same time the loan is made and the consent is subject to the same requirements as a normal QJSA waiver.

I think the reasons are that, in the event of default and subsequent offset, the spouse would forfeit the right to a QJSA benefit on the portion of the account balance posted as security. Therefore if an account balance is used, full QJSA consent is required.

[Guest MES]

So the notice should be subject to the minimum 30-day election period which could be waived, and the loan could only be processed after 7-days? I guess I'm wondering if the consent has to be in the form of the actual waiver itself. If that is the case, then in order for a participant to obtain a loan, it would be necessary for their spouse to waive the J & S option.