AlbanyConsultant Posted January 11, 2019 Posted January 11, 2019 We're taking over a plan with several loans outstanding, and the plan sponsor has never known that they could pass loan admin fees to participants (if properly disclosed), so they are now interested in doing so. If I tell the investment product to take loan maintenance fees from participants, they will do so from all participants with loans - they can't exclude certain loans. Is there any issue with starting to charge the annual fee to the existing loans once they've gotten a disclosure notice that this will start happening?
AlbanyConsultant Posted January 11, 2019 Author Posted January 11, 2019 Because it wasn't agreed to at the start of the loan? I suspected that might be the case.
david rigby Posted January 11, 2019 Posted January 11, 2019 Be careful. Was it in the contract, but never enforced? (That's not the same as not being in the loan contract at all.) 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.
QDROphile Posted January 12, 2019 Posted January 12, 2019 And if the contract says fees can be charged, but the administrative fees were covered otherwise as a regular practice*, the practice could have reformed the contract, so the contract term to charge the fees to the participant account is no longer effective and cannot be resurrected. *This is potentially an interesting issue -- possibly a disguised contribution.
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