Life Insurance in 401k Plan

This is a 2 part questions:

Prospective client has Life Insurance in his account.

Plan was established 1/1/2016

Current Account Value -  $137,447 (Zero contributions made in 2020?)

                      Less 2019 Employee Contribution -  $25,000   

                      Seasoned Money Estimate -  $112,447.

 Max LI premium for a whole life policy: $56,223.50

 Current policy: $26,100

 New policy premium limit: $30,123.5 (assuming this is whole life policy subject to 50% cap)

Plan rules for LI are in seciton 7.5 (page 57)

Do those calcs seem correct?  

Also, the same client then wants to borrow $50k from the 401(k) plan.  Not from the LI policies but the non-LI balances.  This shouldn't cause any issues with the 50% limits correct?

Any help or insight would be greatly appreciated.

401k PS Plan Volume Submitter DC Plan Document.pdf

I've been involved with insurance in plans for a number of years. Usually it doesn't make sense. Almost every time it involves the agent using the plan money because it's easier than getting the insured to write a check.

The "seasoned money" is a term of art meaning "money available for withdrawal" and using that money to pay for life insurance just means that you can exceed the incidental limits without disqualifying the plan. Taxes are still due because it's equivalent to an inservice withdrawal.

You seem to be using that amount however to then calculate the incidental limits. And those are based on cumulative premiums, not annual premiums. The loan availability will likely change drastically if you spend as much as you're indicating on life insurance.

Lots of moving parts.