For the purposes of a qualified plan loan, the reasonable rate of interest that the Department of Labor provides is one consistent with rates charged by commercial lenders. To apply a reasonable rate to your qualified plan loan, a plan administrator will typically survey a few financial institutions to get a general idea of the interest rate on a particular type of loan. For example, assume that the purpose of your loan is to buy a home. Your plan administrator would use a rate that is comparable to the rates used by commercial lending institutions for mortgages.

(For more information on borrowing from qualified plan loans, see Borrowing From Your Plan.)

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