KoolLady4 Posted November 2, 2004 Posted November 2, 2004 Trustee would like participant to sign something that says they agree to take the loan even though trustee advises against it. Any thoughts or examples?
pmacduff Posted November 2, 2004 Posted November 2, 2004 If the Trustee is concerned with participant loans, why doesn't he/she have the loan option removed from the Plan (prosepctively, of course)? Why was it in the Plan to start? Also - if the Trustee is advising against it, why is the loan being approved? I'm confused.......
KoolLady4 Posted November 2, 2004 Author Posted November 2, 2004 It does sound weird; they DO want to allow loans, but don't want the employees to take them. I'm going to suggest that they they can limit the # of loans by only allowing for specific reasons.
Fredman Posted November 2, 2004 Posted November 2, 2004 they DO want to allow loans, but don't want the employees to take them. WOW!!!!!!! I'm going to suggest that they they can limit the # of loans by only allowing for specific reasons. Seems to me you are on the right track (limiting reasons and number available). You can also limit how often they can take loans (once per year, etc.).
pmacduff Posted November 2, 2004 Posted November 2, 2004 Why not just remove the loan provision prospecitvely and avoid the whole problem? It's not a protected benefit...
maverick Posted November 2, 2004 Posted November 2, 2004 Only allow 1 loan at a time. Also, don't let participants take a second loan, then use part of the proceeds to pay off the first loan. Another dis-incentive is a high loan application fee, say $150 or $200, and require that the fee be paid by the participant (not from his or her account balance). In this case, you might want to pend the loan app until the participant's check clears. But as others suggest, the best route is to remove the loan provision.
WDIK Posted November 2, 2004 Posted November 2, 2004 they DO want to allow loans, but don't want the employees to take them If I were cynical I might be inclined to believe that they want loans available so that the owner(s) can take loans, but don't want the headache of dealing with loans for the rank and file. Whatever approach you take, make sure that it could not be construed as discriminatory against the non-highly compensated. ...but then again, What Do I Know?
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