Loan Balances
If the plan participant has an outstanding 401(k) loan, it’s important to specify whether the loan is included in the total balance being divided. Some plans reduce the account balance by the loan amount before calculating the award to the alternate payee.
Make sure your QDRO clearly states how loan balances are to be treated. We often recommend deducting the loan from the total only when it’s in the participant’s sole benefit. Otherwise, the alternate payee may receive less than expected.

