[9148]
August 8, 1997
TO: PENSION MEMBERS No. 32-97
PENSION OPERATIONS ADVISORY COMMITTEE No. 28-97
RE: IRS ISSUES LETTER ON PLAN LOANS
______________________________________________________________________________
The Internal Revenue Service recently issued a letter regarding "paperless" loan
transactions for retirement plans. The letter requested general information pertaining to
proposed regulation section 1.72(p)-1, Q&A-3(b) regarding the requirement that a loan be ". . .
evidenced by a legally enforceable agreement . . . set forth in writing . . ." Specifically, the letter
requested guidance whether a written loan agreement must be signed by the plan participant in
order to satisfy this requirement.
The IRS letter, dated June 26, 1997, stated that the requirements of the proposed
regulations under section 1.72(p)-1, Q&A-3(b) will not fail to be satisfied merely because the
participant does not sign the document containing the terms of the loan, as long as the loan
agreement is legally enforceable and the other requirements of the loan are satisfied. The letter
does not address other loan requirements under section 72(p) or under other provisions of the
Code or ERISA.
We will keep you informed of developments.
Kathryn A. Ricard
Assistant Counsel - Pension
Attachment (in .pdf format)