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Loan Source Restrictions on Proceeds -- How is 50% Cap Affected?
BenefitsLink Message BoardsLink to more items from this source
Feb. 9, 2021

"Plan uses a common record-keeper/custodian that also processes participant loans online: Principal. The plan assets consist of only deferrals and safe harbor match (100% vested, not QACA). The plan's loan policy restricts the loan proceeds source to just deferrals. Joe Participant has the same amount of $ in deferrals and SH match. The record-keeper is unable/refuses to process a loan for 50% of the participant's vested balance (essentially 100% of the deferral balance). They are insisting the only way it is possible would be for the plan to amend its loan policy to allow the loan to be taken from all sources. Is that right?"

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