KCoursey

All prior loan agreements and amortization schedules were done on the basis of prime plus 1%. The fiduciary is also the plan sponsor in this case. They have specifically stated they would prefer not to go back and obtain more money from participants who took loans during this time.

Newbie here looking for advice. We have a client who has had an established loan policy for the last several years. Within the loan policy it states that the loan rate will be prime plus 2%. However, the trustee/custodian only charged prime plus 1% for all loans through the time it was recently discovered. This was an administrative error on the trustee/custodian side. Upon discovering the error, all new loans were issued with the correct rate. The client would like to retroactively amend the loan policy to reflect the loan rate actually used during that erroneous time period. Questions: 1. Would self-correction as described above be sufficient in this case? 2. Would VCP filing be a better option? 3. If VCP, we are having trouble determining where it fits under Form 14568-E - Appendix C Part II Schedule 5. There is no clearly defined option, as the loans were not in default and did not violate the terms of 72(p). Any advice would be greatly appreciated.