R. Butler Posted March 14, 2013 Posted March 14, 2013 Plan is switching new recordkeepers. Plan has existing loans. The new service provider is telling plan sponsor that they can reamortize the loans unilaterally rather than just continuing existing loans as is. I've never seen this before and can't find a basis for it. The new recordkeeper can't really provide me a basis for that conclusion except that it can be done. Can anyone provide me a basis for allowing a reamortization?
BG5150 Posted March 14, 2013 Posted March 14, 2013 Can anyone provide me a basis for allowing a reamortization? 1) Plan must allow for it. 2) Participant must ask for it. 3) It can't run afoul of the reamortization rules. What does the new r/k mean by unilaterally reamortizing the loans? Giving people more money? Make up for lost payments? Extend all loans out to 5 years? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
masteff Posted March 14, 2013 Posted March 14, 2013 What BG said. Reamortize for what purpose? Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
ESOP Guy Posted March 14, 2013 Posted March 14, 2013 Maybe this would fall under participant needs to ask for it but there is a promisory note out there I assume that defines when the payments start, how much they are, and so forth. So besides pension law how can a recordkeeper just change a valid contract like a promisory note without the consent of the parties to the contract?
masteff Posted March 15, 2013 Posted March 15, 2013 My actual experience is for a change in the number of payments per month: for biweekly to semimonthly payroll tranfers or for termed ee from payroll deduct to monthly coupon book. Our loan policy stated it could happen and the ee got notice of the revised payment. But the OP does not state anything about a change in payment frequency. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
BG5150 Posted March 15, 2013 Posted March 15, 2013 But the OP does not state anything about a change in payment frequency. And that's something the new r/k would have nothing to do with. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
david rigby Posted March 15, 2013 Posted March 15, 2013 Might this be a red flag relating to the ability of the new recordkeeper? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
BG5150 Posted March 15, 2013 Posted March 15, 2013 Might this be a red flag relating to the ability of the new recordkeeper? Well, are they saying the loans (MUST, SHOULD, COULD) be reamortized? The word chosen is very important. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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