Can deceased participant's loan be repaid by spousal beneficiary?

Hello - I am wanting to know what I need to look at in terms of documents, rules, etc on this question.  A participant died with an outstanding loan.  Her husband is her bene and he also works for the same company.  He wants to repay the loan so it does not become taxable.  The recordkeeper is telling him he cannot repay it.  I am not sure what is the basis for the recordkeeper not allowing this.  Should the bene be able to repay the loan?  What would legally prevent him from doing so?  thanks!

I don't know why they wouldn't allow but maybe he can accomplish this by jumping through a few hoops: take a distribution via a direct rollover to an IRA, the loan would be distributed/offset but without any taxes (or cash) withheld; then come up with the cash equal to loan offset (which he wants to do) and roll that into the IRA as well (may need to provide some documentation regarding the loan offset to the IRA custodian. If he wants everything consolidated in his employer's plan, he could roll that IRA into the plan, if allowed. There would be a 1099R on the loan offset but he'd report as rolled over on tax return and rollovers are reported to IRS, so there is a trail.

I don't think it can be repaid like the husband requested and @CuseFan's suggested course of action is the way to go.  

The issue is that upon the participant’s death, the loan typically becomes immediately due and payable under the plan terms. If not repaid within the applicable cure period, the outstanding balance becomes a deemed distribution or loan offset.  However, because of the death of the participant there is a legal/operational barrier to the beneficiary repaying the loan because the loan was an obligation of the deceased participant. That is, pursuant to §72(p) the plan loan was made to the participant and only to the participant. (There are provisions in §72(p) that would permit a loan to a beneficiary from the beneficiary's own interest in the plan (e.g., a loan taken after the participant's death from the account that has been transferred to the beneficiary) but that is not what would be occurring here.)  Here the original loan was to the participant and the beneficiary repaying the loan would be an assumption of that loan.  Not saying it couldn't happen, but no plan documents, loan policies, or promissory notes that I have ever seen provide that a beneficiary (or anyone for that matter) can assume an outstanding loan and almost all of those documents would have flatly stated that the loan cannot be assigned or assumed.