Loan Policy

[52626]

Client is using one of the major mutual fund houses 401(k) bundled services. Recently the plan added the loan feature to the plan. The platform amended the document and indicated loans are allowed.

According to the platform, there is no loan policy. The provisions of the loan are set forth in their service agreement with the plan sponsor.

Question:

Doesn't the employer need to make the written loan policy available to the plan participants? Since the policy sets forth the criteria for a loan i.e.. minimum, number of loans outstanding, repayment etc., it would seem to me this information needs to be provided to a participant so they can understand the loan procedure.

Thanks

[FormsRstillmylife]

The Plan Administrator's loan policy can be set forth in the service agreement, but the summary plan description should either be updated or have an addendum setting forth all those points you listed. We have a Plan level policy that is too detailed for the participants and then a simplified participant-friendly version inserted in the SPD.