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Finance - Retirement Planning BJ has a vested account balance in his employer-sponsored qualified money purchase pension plan of $60,000
Finance - Retirement Planning
BJ has a vested account balance in his employer-sponsored qualified money purchase pension plan of $60,000.
He has two years of service with his employer and the plan follows the least generous graduated vesting schedule permitted under PPA 2006.
If BJ has an outstanding loan balance within the prior 12 months of $15,000, What is the maximum loan BJ could take from this qualified plan, assuming the plan permitted loans?
Expert Solution
The value of maximum loan that can be taken would be lesser of the following:
1) $50,000
or
2) 50% of Vested Account Balance which would be equal to $30,000 ($60,000*50%)
Since, BJ has an outstanding loan balance within the prior 12 months of $15,000, the maximum amount of loan that can be availed will be reduced with amount of outstanding loan.
So, the maximum loan BJ could take from this qualified plan, assuming the plan permitted loans would be
= $30,000 - $15,000
= $15,000
So, maximum loan BJ could take from this qualified plan, assuming the plan permitted loans would be $15,000.
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