Regarding nonpenalized loans from qualified plans, which statement is correct?

The statement that loans from qualified plans are limited to one-half of the vested account balance is accurate because the Internal Revenue Code establishes specific guidelines for borrowing from retirement plans. When taking a loan from a qualified plan, the maximum amount a participant can borrow is generally limited to the lesser of $50,000 or 50% of their vested account balance. This rule is in place to ensure that retirement savings aren't overly depleted through loans, which could undermine an individual's future financial security.

While the other statements may seem plausible, they do not align with the specific regulations governing retirement plan loans. The first statement suggesting loans can exceed $50,000 is incorrect because it goes against IRS limits. The second statement, implying that all participants can take loans without any restrictions, fails to consider that the plan itself may impose additional limitations based on plan rules or eligibility. Lastly, the assertion that loans may not be repaid if the participant retires overlooks the fact that loans typically must be repaid according to the plan’s terms, regardless of retirement status, unless the loan is treated as a distribution.