Suspension of 401k loan repayments

[DDB BN]

We are getting many calls to submit the 12 month suspension request to the recordkeepers for loan repayments by participants who were laid off from their jobs.  Would there be any advantage or disadvantage to waiting until closer to the end of the cure period to submit the 12 month suspension form to the recordkeeper?

[Bird]

Do the recordkeepers have a system for accepting/processing this?  Seems like you're asking for extra work if you try to do anything before the dust settles somewhat.  

[DDB BN]

I do not think they have procedures in place for this at this time.  I would prefer to wait a bit to see what happens but participants are calling in large #s.  I was thinking that we could extend the clock on the 12 month suspension until later on and not worry about the loan defaulting based on the cure period.  For example, if the first missed loan date is 04/02/20, the end of the cure period would be 09/30/20.  If we requested the 12 month suspension in August 2020, the participant would have until August 2021 to start repaying.  Not sure if this is ok.

[Larry Starr]

4 hours ago, DDB BN said:

I do not think they have procedures in place for this at this time.  I would prefer to wait a bit to see what happens but participants are calling in large #s.  I was thinking that we could extend the clock on the 12 month suspension until later on and not worry about the loan defaulting based on the cure period.  For example, if the first missed loan date is 04/02/20, the end of the cure period would be 09/30/20.  If we requested the 12 month suspension in August 2020, the participant would have until August 2021 to start repaying.  Not sure if this is ok.

There are no procedures yet, so the answer is you have to wait, as frustrating as that is. I have no doubt that the big recordkeepers are floundering about to figure out what to do, and will eventually come up with something (that might be good or bad).  For now, just live with the actual results.  If a participant wants to stop paying, just have them stop paying. Within some short period, you will likely have guidance.  I know FIS (Relius) is actively working on modifying their admin system.  FWIW

[DDB BN]

Thank you.