Question

When auditing employee benefit participant loans, which of the following requirements should the trust auditor determine have been met?

a. The plan specifically authorizes participant loans.
b. The amount of the loan shall be equal to the lesser of 50% of the participants vested interest $50,000; provided that any participant may borrow up to $15,000.
c. The loan is not secured by participant's interest in the plan.
d. The loan must be repaid in 10 years.

Answer 1

The trust auditor should ensure that the plan authorizes participant loans, sets limits on the loan amount, requires repayment in 10 years, and does not secure the loan with the participant's interest in the plan.

Step-by-step explanation:

The trust auditor should determine the following requirements have been met:

1. The plan specifically authorizes participant loans.
2. The amount of the loan shall be equal to the lesser of 50% of the participant's vested interest $50,000; provided that any participant may borrow up to $15,000.
3. The loan is not secured by the participant's interest in the plan.
4. The loan must be repaid in 10 years.