issuance of a loan for divorce

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!

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.

Thank you- Belgarath.  it appears the procedures only state "upon receipt of a DRO"

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

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?