I 
110TH CONGRESS 
2D SESSION 
H. R. 6708 
To amend the Internal Revenue Code of 1986 to provide that no loan 
may be made from a qualified employer plan using revolving credit 
arrangements and to limit the number of loans that may be made 
from a qualified employer plan to a participant or beneficiary. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 31, 2008 
Mr. FOSTER (for himself and Mr. POMEROY) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
that no loan may be made from a qualified employer 
plan using revolving credit arrangements and to limit 
the number of loans that may be made from a qualified 
employer plan to a participant or beneficiary. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. QUALIFIED EMPLOYER PLANS PROHIBITED 
FROM MAKING LOANS THROUGH REVOLVING 
CREDIT ARRANGEMENTS. 
(a) IN GENERAL.—Subsection (a) of section 401 of 
the Internal Revenue Code of 1986 is amended by insert-
ing after paragraph (37) the following new paragraph: 
‘‘(38) PROHIBITION OF LOANS THROUGH RE-
VOLVING
CREDIT
ARRANGEMENTS.—A trust shall 
not constitute a qualified trust under this section if 
the plan makes any loan to any beneficiary under 
the plan in the form of a revolving credit arrange-
ment.’’. 
(b) APPLICATION TO EMPLOYEE ANNUITIES.— 
(1) IN GENERAL.—Section 404(a)(2) of the In-
ternal Revenue Code of 1986 (relating to employees’ 
annuities) is amended by striking ‘‘and (31)’’ and 
inserting ‘‘(31), and (38)’’. 
(2) SECTION 403(b) ANNUITY
CONTRACTS.— 
Section 403(b)(1) of such Code is amended by strik-
ing ‘‘and’’ at the end of subparagraph (D), by in-
serting ‘‘and’’ at the end of subparagraph (E), and 
by inserting after subparagraph (E) the following 
new subparagraph: 
‘‘(F) 
the 
requirements 
of 
section 
401(a)(38) are met with respect to the contract 
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and any plan under which the contract is pur-
chased,’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after the 
date of the enactment of this Act. 
SEC. 2. LIMITATION ON NUMBER OF LOANS FROM QUALI-
FIED EMPLOYER PLANS WHICH MAY BE OUT-
STANDING WITH RESPECT TO ANY PARTICI-
PANT OR BENEFICIARY. 
(a) IN GENERAL.—Paragraph (2) of section 72(p) of 
the Internal Revenue Code of 1986 (relating to loans 
treated as distributions) is amended by redesignating sub-
paragraph (D) as subparagraph (E) and by inserting after 
subparagraph (C) the following new subparagraph: 
‘‘(D) EXCEPTION
ONLY
TO
APPLY
TO
LOANS.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall not apply to any loan made after the 
date of the enactment of this subparagraph 
if, immediately after such loan is made, the 
number of outstanding loans from the plan 
to the participant or beneficiary exceeds 3. 
‘‘(ii) REFINANCINGS.—If any loan 
made after the date of the enactment of 
this subparagraph refinances 1 or more 
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outstanding loans from the plan to the 
participant or beneficiary, the number of 
loans taken into account under subpara-
graph (A) with respect to such loan shall 
be equal to 1 plus the number of loans re-
financed by such loan.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to loans made after the date of 
the enactment of this Act. 
Æ 
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