Participant Loan Payroll Deductions

[austin3515]

Participant in a real cash crunch. State Law (CT) requires the employees authorization for payroll deductions, and the employee can revoke the authorization. Does anyone have any concrete cites for whether or not payroll deductions can/should cease if the participant rescinds the authorization?

I realize of course the loan must still be repaid, and that therefore the sponsor must try to get payment from the participant via personal checks or whatever. Also, I think the sponsor should never lend them money again, but is that where it ends?

All money is in individual accounts.

[buckaroo]

I thought I would give this a shot.

First, if you are speaking about contributions, I would assume that your document states that a participant can stop contributions practically immediately. The document I work on states that it can be stopped within 30 days of writtten notice being provided to the administrator.

Second, as far as the loan repayments are concerned, what does the loan paerwork say? I believe the loan package we set-up states that that the participant agrees to payroll deductions for the loan repayments. Our loan package requires the participant's signature. I would think that this would over ride the other authorization, but I am not sure. Your best bet would probably be to get a hold of an ERISA attorney who is also familiar with the state laws and payroll deductions in CT.

Sorry if this is more confusing than helpful.