Under Section 457 Plans, loans are available only to government plans.

Under Section 457 Plans, loans are available only to government plans.

• A. True
• B. False
• C. Loans are available to all plans after age 50
• D. Loans are never allowed

Answer: (A)

Loans from Section 457 plans are a feature you commonly see in government plans. Private-sector 457 plans generally do not offer loan provisions. In a governmental 457 plan, you can borrow from your plan balance and repay the loan to the plan; if you leave employment with an outstanding loan, the loan will typically become due or be treated as a taxable distribution, with potential penalties if you're under 59½. Because of this practical difference in plan design, the statement that loans are available only to government plans aligns with how these plans are typically set up on exams. Always check the specific plan document, but this distinction is the one most often tested.

Loans from Section 457 plans are a feature you commonly see in government plans. Private-sector 457 plans generally do not offer loan provisions. In a governmental 457 plan, you can borrow from your plan balance and repay the loan to the plan; if you leave employment with an outstanding loan, the loan will typically become due or be treated as a taxable distribution, with potential penalties if you're under 59½. Because of this practical difference in plan design, the statement that loans are available only to government plans aligns with how these plans are typically set up on exams. Always check the specific plan document, but this distinction is the one most often tested.