Seeking advice/experience on handling participant loans in accounts that are subject to QDROs - e.g. plan provisions treating the loan as in default to the extent necessary to make a distribution to an alternate payee under a QDRO.

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Loans are usually assets of the participant's account. The big problem is that it is not a liquid asset and not a readily divisible asset. If all or part of a loan is allocated to an alternate payee, the asset keeps its inherent properties, such as maturity, defaut provisions, interest rate and the like. Your question sounds like you want to modify the loan or partially default the loan for convenience of QDRO administration. Be very careful about that. Nothing about QDROs overrides the loan rules or the contractual rights associated with the loan. Also the plan and its written QDRO procedures should be designed to deal with attempts to assign all or part of a loan to an alternate payee. I generally design documents to discourage assignment and maintain status quo for the plan. For example, the entire loan remains payable through payroll deduction under my documents.