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Question 14 — Loans from a 403(b)

Q. We are a TPA providing administration for a 403(b) plan, and we have received a request for a loan from a participant who finished paying off a previous loan four months ago. Can we permit (assuming the account balance is large enough) a $50,000 loan from his account since he has no outstanding loans in any plans of the employer?

A. No — you have to subtract his largest outstanding loan balance for the previous 12-month period (minus the outstanding loan balance at the time of a new loan, which of course, would be zero in this case) from the $50,000 available under the loan limits described in Code Section 72(p). 

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