Does the provisions of the Soldiers' and Sailors' Civil Relief Act (Relief Act) apply to participant loans from qualified plans?

The Relief Act was enacted in 1940 and has been updated since then. Among its provisions is the requirement that there is a 6% interest cap on mortgages, credit card debt and "other loans" entered into before being called to active duty. In effect we are looking at the "military leave" period.

Some practioners have been concluding it does apply and others take the opposite approach.

Keep in mind that there was no mention of this, to the best of my recollection, during Desert Storm in 1991. In addition the services covered under The Relief Act are less inclusive than those covered under USERRA.

It is a federal statute so the preemption rules wouldn't apply. I can find no reason why it would not apply. The Department of Labor has apparently told inquiring practicioners that it does apply.

The position of a well-known recordkeeper during their conference call on military leave issues was that it definitely would apply. But given the perspective that the participant is paying the loan back to themselves, they might not want to have their loan rate reduced to 6% for the duration of their leave.

RCK