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Qualified Retirement Plan Loans Toolkit
Practical Law Toolkit 5-532-1866 (Approx. 8 pages)
Qualified Retirement Plan Loans Toolkit
by Practical Law Employee Benefits & Executive Compensation
| Maintained • USA (National/Federal) |
Resources to help with compliance under the Employee Retirement Income Security Act of 1974 (ERISA) and Section 72(p) of the Internal Revenue Code (Code) for loans to participants and beneficiaries from qualified retirement plans.
Employee benefit plans that are qualified defined contribution plans, such as profit-sharing, money purchase, 401(k), 403(b), and 457(b) plans, are permitted, but not required, to offer loans to plan participants. Plan loans must comply with several sets of rules, otherwise the loan may be taxable to the plan participant, including:
- The prohibited transaction rules under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code).
- The limitations under Code Section 72(p)(2) (26 U.S.C. § 72(p)(2)).
Plan sponsors must follow the requirements of ERISA and the Code to ensure that loans are properly structured. They must also take into account the loan provisions in the plan document and any loan policy.
This Qualified Retirement Plan Loans Toolkit provides several continuously maintained resources designed to help plan sponsors comply with these rules.