Lori H Posted March 19, 2014 Posted March 19, 2014 A small plan has a loan policy that restricts new loans no sooner than one month after the prior loan was repaid. A participant paid off the loan via payroll deduction as of the end of Feb, but it did not post to the trust until 3/19. Could the new loan be issued around the first of April or would it be a month from the date the last payment actually posted? thanks.
QDROphile Posted March 19, 2014 Posted March 19, 2014 That is a question for the fiduciary who has the authority to interpret plan terms.
Bird Posted March 20, 2014 Posted March 20, 2014 That is a question for the fiduciary who has the authority to interpret plan terms. And for my plans, the fiduciary is asking me for help interpreting. I don't think it's all that difficult actually; the conservative answer in this context is that amounts withheld from pay become plan assets no later than 7 business days, so I believe you could use that date with no trouble. Personally, I'd be comfortable using the withholding date, because...well, who's going to give a crap about it? The point of the rule is to make people wait a little bit, apparently (although I'm not sure what this accomplishes), and if they wait 27 days vs 31 or whatever, and no one objects either way, then go for it. It's not like the IRS or DOL are going to be checking the loan dates. Ed Snyder
BG5150 Posted March 20, 2014 Posted March 20, 2014 A small plan has a loan policy that restricts new loans no sooner than one month after the prior loan was repaid. A participant paid off the loan via payroll deduction as of the end of Feb, but it did not post to the trust until 3/19. Could the new loan be issued around the first of April or would it be a month from the date the last payment actually posted? thanks. Did they pay the interest on the late deposit and pay their excise tax on Form 5330? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
masteff Posted March 20, 2014 Posted March 20, 2014 The participant lost control of the money on the pay date in February. The payment was effectively submitted to the employer aka the plan sponsor who became legally obligated to fund the payment into the trust. 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 20, 2014 Posted March 20, 2014 I was always of the opinion the loan payment is considered made on the paycheck date. Some record keeping systems will use that date for the daily interest calculation. However, some use the deposit date for that calculation. It kind of makes sense either way. I never figured out which was was correct. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Recommended Posts
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 accountSign in
Already have an account? Sign in here.
Sign In Now