That was the conclusion of an advisory opinion from the Department of Labor’s Pension and Welfare Benefits Administration (PWBA) issued following a request from the American Institute of Certified Public Accountants for clarification of the plan loan rules, according to a BNA report.
According to the PWBA, loan repayments are sufficiently similar to routine participant contributions that both should be handled similarly.
Holding participant loan repayments beyond the 15th business day of the month following the month in which the employer receives them, would raise serious questions about whether the employer is putting the loan repayments into the plan as soon as they were reasonably segregable from its general assets, the PWBA opinion said.
The document is Advisory Opinion, No. 2002-02A, dated May 17, 2002.