Loans to Plan Participants and Beneficiaries Who Are Parties in Interest with Respect to the Plan Regulation

Section 408(b)(1)(C) of ERISA requires plan loans to be made in accordance with specific provisions set forth in the plan document. The Department's regulation at 29 CFR 2550.408b-1(d) prescribes eight specific provisions that must be included in the plan documents, including: (1) an explicit authorization for the plan fiduciary responsible for investing plan assets to establish such a loan program; (2) the identity of the person or position authorized to administer the program; (3) a procedure for applying for loans; (4) the basis on which loans will be approved or denied; (5) limitations (if any) on the types and amounts of loans offered; (6) the procedure for determining a reasonable rate of interest; (7) types of collateral that may secure a participant loan; and (8) the events constituting default and the steps that will be taken to preserve plan assets in the event of such default. The collected information will be used by plan participants and beneficiaries wishing to obtain plan loans. It also will be used by plan administrators in administering their plans' loan program. The Department also will use the information in any enforcement proceedings regarding plan loans.

The latest form for Loans to Plan Participants and Beneficiaries Who Are Parties in Interest with Respect to the Plan Regulation expires 2026-08-31 and can be found here.