I have a situation where a participant just recently rolled money into his current employers 401(k)plan. He was planning on using some of the money for a down payment on a new house. His current employers plan does not allow for loan. Is there anyway that he can take a distribution? The employer does not want to amend the plan to allow for loans.

Any thoughts on this would be greatly appreciated.

It depends on the plan. Some plans allow hardship withdrawals for non-401k assets...this may be an option because the individual is buying a house. Alternatively, some plans allow in-service withdrawals, for example if the participant is over 59 1/2.

Unfortunately, the employee is not over 59 1/2 so the in-service withdrawal is out and the plan does not provide for a hardship of non 401(k) assets.

Doesn't the plan allow for in-service distribution of rollover amounts? If not, I'd consider adding it. That would certainly solve your problems--gives the employee access to his money, does not create a policy that the employer can't live with, and is philosophically sound (the employee rolled the money in solely based on their own preferences--let them take it out whenever they want).