Company A sold some assets, but the sale did not constitute a sale of "substantially all of the assets in a trade or business" so as to allow for a 401(k) distribution to the employees affected by the sale. As a result, the employees, who now work for the purchaser, still have accounts in Company A's 401(k) plan. Some of the employees had loans under Company A's plan and are paying the loans with checks.

Can these former employees of Company A take new loans from their accounts in Company A's plan? The plan does not appear to specifically prohibit such a practice. Would there be any reason Company A would not want to permit this if it is otherwise allowable?

[This message has been edited by Scott (edited 02-11-2000).]

Company A' former employees are still "participants" in company A's plan. If participants are permitted to borrow from the plan, I don't see why the former employees can't still borrow (forgive the double negative).

What does the plan say?

Does the Plan restrict loans to "active participants" or some other terminology?