Under existing rules, 401(k) participants can borrow up to half of their account balance but not more than $50,000. A plan sponsor can prohibit loans in its 401(k) or restrict them to smaller amounts or only certain kinds of loans, say for education expenses, to pay unreimbursed medical expenses or to buy a first-time residence.

There's no reason to change any of that. But the council has put forth a few recommendations that sponsors should consider as ways to slow, if not prevent, leakage. Among them:

• Discourage or even forbid hardship withdrawals until all loan options have been exhausted. 

• Make sure participants understand that contributions and matching contributions stop for six months once they opt to take a hardship withdrawal. 

• Shut off the employer match as a source for loans or withdrawals until retirement, even if the employee quits. 

• Allow loans to continue after termination of employment and even allow the initiation of new loans after termination. 

• Encourage employees to pay off their loans by charging a lower fee to accounts without loans.

The council came up with its list after hearing from a number of experts, including a few who said that simply making loans available through a retirement plan may actually encourage participation from workers who otherwise would not save for retirement.

Along with suggesting what sponsors might want to do, the council also said the Department of Labor could help.

For starters, it said, the DOL could communicate with employers that there's nothing in the law compelling repayment of loans within 60 days of an employee's termination, a common practice.

Paying off a large loan, especially when someone has lost an job or is switching jobs, is a lot for most folks to handle. With electronic fund transfers and automatic bank debit arrangements, employers can handle loan transactions fairly simply, the plan said – even new loans taken after termination.

The DOL also could help by creating model transfer forms to make it easier for plan sponsors to facilitate rollovers to a terminated employee's next employer. 

There's one more really good reason sponsors will want to rethink their approach to retirement plan loans: Both the DOL and the IRS, worried about leakage, appear to be ramping up their enforcement of noncompliant hardship withdrawals.

I don't know about you, but that sounds like more of a hassle than making a few tweaks to corporate policy.