Do Truth In Lending Notices apply for 401(k) loans

Does the Federal Truth In Lending information have to be in loan documents for participant loans?

No.  As long as the loan meets all the usual requirements, it is exempted from truth in lending.  Exemption effective 2010 I believe. 

Cite, if possible?  (checking EOB now)

EOB, CH 14, Section II, Part B, 

2.d.4) Regulation Z (Truth In Lending) does not apply to participant loans. Regulation Z, 12 C.F.R. Part 226, §226.3(g), 74 F.R. 5244 (January 29, 2009), which implements the Truth In Lending Act, as been amended to exempt an extension of credit to a participant in an employer-sponsored retirement plan. This includes loans from qualified plans described in IRC §401(a), section 403(b) plans, and governmental 457(b) plans. In order for the exemption to apply, the loan must be made from fully vested funds from the participant’s account and must be made in compliance with the requirements of the tax code. The amendment is effective July 1, 2010. Prior to July 1, 2010, Regulation Z applied to a plan that has made more than 25 loans in the preceding year. The 25-loan threshold was decreased to 5 in the case of loans secured by a dwelling. ERISA does not preempt the Truth-In-Lending rules, so the federal government was able to apply these rules to loans without regard to ERISA. The elimination of these rules with respect to participant loans should help simplify the process of making loans from plans.

the reg language (that I am now adding to my EOB notes)

12 CFR  226.3 Exempt transactions.

This regulation does not apply to the following:

12 CFR Part 226.3(g)

Employer-sponsored retirement plans. An extension of credit to a participant in an employer-sponsored retirement plan qualified under Section 401(a) of the Internal Revenue Code, a tax-sheltered annuity under Section 403(b) of the Internal Revenue Code, or an eligible governmental deferred compensation plan under Section 457(b) of the Internal Revenue Code ( 26 U.S.C. 401(a); 26 U.S.C. 403(b); 26 U.S.C. 457(b)), provided that the extension of credit is comprised of fully vested funds from such participant's account and is made in compliance with the Internal Revenue Code ( 26 U.S.C. 1et seq.).

What does "fully vested funds" mean in this case.  Just the vested balance?

Could you ever take a loan from "non-fully vested funds"?

Im thinking it is vested balance. Technically, you could take a loan in excess of vested balance if you apply the old $10,000 exception.  In that case you would need additional collateral and I guess truth in lending DOES apply.

The way I read it, a participant who takes a loan from his/her vested balance (requiring no outside collateral) is exempt from truth in lending.