Revoking a loan policy

[Guest Pat Metallic]

In a 401(k) plan with a loan provision and policy that is being utilized by participants, can an employer revoke that loan policy? In order to cut down on administration and expenses, the employer would like to disallow future loans while allowing existing loans to be repaid according to the amort schedules.

[david rigby]

IRS Reg 1.411(d)-4, Q&A-1, subsection (d) lists examples of items that are not 411(d)(6) protected benefits:

..."(4) the availability of loans (other than the distribution of an employee's accreud benefit upon default under a loan)..."