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How is a maximum loan calculated if a participant takes out more than one loan within the last 12 months? E-mail Alert 2003-24 Rev. 12-16-03

	Assumptions:
	Participant has a vested account balance of over $100,000 at all times.
	Plan permits a total of up to 4 loans for a participant.
	Plan does not limit the number of loans in a 12 month period.
	The participant has not had prior loans (and, thus, no loans have been in default).
	Single employer with one plan (no control group or affiliated service group relationships exist).
	Example 1

		Loan 1	Loan 2
Loan origination date		08/19/03	12/23/03
Loan Amount Request		$20,000	$10,000
Highest outstanding loan balance in last 12 months as of 12/23/03		NA	$20,000
Maximum amount available for loan on of 12/2303		NA	$50,000 less $20,000 = $30,000*

* The amount is the lesser of 50% of the vested account balance or $50,000 reduced by the highest outstanding loan balance during the last 12 months. Since the participant had an outstanding loan in the last 12 months and a vested account balance of over $100,000, the new loan may not exceed $50,000 less the highest outstanding loan in the last 12 months.

Example 2 Assume everything is the same as example 1 except that in addition to loans 1 and 2, the participant has unexpected expenses and needs to apply for a third loan on 04/15/04. The participant is requesting the maximum available amount on 04/15/04, what is that amount?
		Loan 1	Loan 2	Loan 3
Loan origination date		08/19/03	12/23/03	04/15/04
Loan Amount Request		$20,000	$10,000	Maximum available
Highest outstanding balance (on any given day) in the last 12 months before 04/15/04 occurred on 12/23/03		$19,120.00**	$10,000	NA
Maximum available amount or if less the amount requested		$20,000	$10,000	$50,000 less ($19,120 plus $10,000) = $50,000 less $29,120 = $20,880***

**	The $20,000 reduced by loan repayments to $19,120 as of 12/23/03 when the second loan is at its highest principal amount.
***	Note that although the two highest outstanding loan balances during the last 12 months were $20,000 and $10,000 respectively, the rule asks for the highest outstanding balance on any one day during the last 12 months. Thus, we resist the impulse to simply add highest outstanding balances of $20,000 and $10,000 (which would give the highest loan amounts made during the last 12 months). Instead, we must use the one day during the year that would reflect the highest outstanding balance of all the loans when combined together on that one day.