Guest Laura Posted March 21, 2003 Report Share Posted March 21, 2003 This is a repost from the 401(k) topic MBozek wrote: "A; Borrowing directly from the insurer is a common practice in 403(B) plans where there is no trust and the employee uses the assets under the annuity contract as collateral. The insurer continues to pay the fixed rate of interest guaranteed under the annuity contract while the employee pays 1 or 2 % over the credited rate of interest to the insurer. The loan provision is permitted under state insurance law." Observation: some 403(B) plans are subject to Title I of ERISA, and others are not. Question: Does your post assume that the 403(B) plan is not an ERISA plan (and accordingly ERISA prohibition on assignment doesn't apply)? Would a state insurance law of the nature you describe be "saved" from preemption? If so, this surprises me because the issue of plan loans is arguably a fiduciary issue, which is outside of the scope of preemption. Second question: Can these Fund Sponsor-direct loans be made to former employees? I recall that loans to former employees is prohibited, yet I can't seem to find authority for the prohibition. Link to comment Share on other sites More sharing options...
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!Register a new account
Already have an account? Sign in here.Sign In Now