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the Shedds, Mr. Estes, or Estes Co. The loan did not hinder the
annual payment of benefits. Estes Co. received some benefit in
that, on an overall basis, the cost of borrowing the money from
the plan was slightly less than the cost of borrowing a similar
amount from another source. Nonetheless, we are persuaded that
the primary purpose of the loan was to benefit plan participants.
Consequently, although the loan failed to meet the prudent
investor test, we find that it did not violate the exclusive
benefit rule. Accordingly, we conclude that extension of the
loan to Estes Co. did not cause the plan to fail to satisfy the
requirements of sections 401(a) and 501 for plan years ended
September 19, 1987, and for subsequent years.
To reflect the foregoing,
Decision will be
entered for petitioner.
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