A: The outstanding balance of all loans from the plan may not exceed the lesser of $50,000 or 50% of the present value of the participant's vested account balance. Any portion of an outstanding loan that exceeds these limits will be considered a taxable distribution to the participant subject to any applicable early distribution penalties.

A: A loan to a participant is required to be repaid within five years or it is treated as a taxable distribution at the time the loan is made. However, the five-year repayment period does not apply to a loan used to acquire any dwelling unit that within a reasonable time is to be used as the principal residence of the participant.

A: The loan repayment schedule must provide for level amortization. That is, repayment must be made in substantially equal installments consisting of principal and interest and must be made not less frequently than quarterly over the term of the loan. Accordingly, the participant cannot repay the loan in one balloon payment at the end of the loan term.

A: The deductibility of interest on a loan from a qualified plan is first determined under the general rules governing the deductibility of interest. (Notwithstanding the general rules, interest on plan loans is never deductible if the loan is made to a key employee.)

A: If the plan is subject to the automatic survivor benefit requirements, it must provide that no portion of a participant's vested balance may be used as security for a plan loan unless the participant's spouse consents to the loan within the 90-day period ending on the date the security agreement becomes effective.

A:1) The borrower fails to pay the full amount of any payment on the date it is due;

2) The borrower dies, or ceases to be an employee of the Employer;

3) A distribution of benefits is made by the Plan to the borrower, or a beneficiary of the borrower;

4) The borrower (a) files a petition in bankruptcy, (b) is adjudicated insolvent or bankrupt, (c) becomes the subject of any wage earner plan under the general Bankruptcy Code as now or hereafter in effect, or under any applicable state insolvency law;

5) Any required spousal consent is effectively revoked or otherwise becomes invalid or inoperative;

6) The borrower fails to honor any obligation created under the terms of the Note executed by the Borrower in connection with the loan; or

7) Any additional grounds for default that the Plan Advisory Committee under jurisdiction of the Internal Revenue Code and the Plan Document, may so determine.