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SMITH, JOHN R

Plan #: G12345
Plan: Demo Plan

Last time logged in:
10:30 AM  ET


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Loan Information


  1. How much can I borrow?
  2. How long will I have to pay back my loan?
  3. Which money sources will you withdraw the loan from?
  4. What is the interest rate that will apply to my loan?
  5. How will I make repayments to the loan?
  6. Is there a charge for taking a loan?
  7. When will I get my loan check?
  8. What forms do I need to request a loan?
  9. What happens if I cannot repay my loan or my employment status changes?
  10. Other general information you should know.
  11. Additional questions?
1. How much can I borrow?


In general, the minimum amount to be borrowed is $1,000 and the maximum amount is 50% of your vested account value, up to $50,000. The maximum loan amount may be restricted to certain money sources as outlined in the plan document. Any current or previously outstanding loans may affect the amount available for withdrawal on a new loan.


2. How long will I have to pay back my loan?


The loan duration must be for at least one year, but not more than five years. Loans for the purchase of a primary residence may be from one to 30 years. You will be required to provide any supporting information deemed necessary by the plan administrator.


3. Which money sources will you withdraw the loan from?


The money source withdrawal sequence for the loan distribution is determined by the rules outlined in your plan document. Investment options will be withdrawn on a pro-rata basis.


4. What is the interest rate that will apply to my loan?


The plan administrator will establish a reasonable rate of interest, which will provide the plan with a return comparable to the rates being charged by lending institutions in the same geographic locale as the employer for loans made under similar circumstances. A loan will carry the same rate of interest throughout its term.


5. How will I make repayments to the loan?


Loan repayments will be made via payroll withholding, and the participant must enter into a payroll deduction agreement with the employer.

Repayment frequency is determined by the plan sponsor. Payroll deductions will commence within five weeks of the origination of the loan. Loan repayments will be due even during a leave of absence; payroll deduction is waived for the period of the leave, and repayments may be made via personal check, money order, or certified or cashier's check to the plan. Loans may not be consolidated or refinanced.

All loans contain a demand feature requiring repayment in full upon the borrower's termination of employment (except for approved leaves of absence) or upon default. In the event of default, the plan administrator shall take such reasonable actions that a prudent fiduciary in like circumstances would take to protect and preserve plan assets. The plan administrator may grant the participant reasonable rights to cure any default, provided such actions would constitute a prudent and reasonable course of conduct for a commercial lender in like circumstances. The plan administrator may treat a loan that has been defaulted upon and not cured within a reasonable period of time as a deemed distribution from the plan, potentially subject to personal income tax.


6. Is there a charge for taking a loan?


A loan origination fee may apply. If so, the amount received for the loan will be reduced by this fee.


7. When will I get my loan check?


The Truth-in-Lending Statement, Promissory Note, and Loan Repayment Schedule will be available for review on the Web sites by you and your employer within two business days. If your plan provides for cash only as a distribution option at termination and/or retirement and your employer allows direct loan checks, the loan check will be sent regular mail directly to your mailing address. Otherwise, the loan check will be sent via regular mail to your employer within five business days.


8. What forms do I need to request a loan?


Completion of the Spousal Consent form may be required if the participant's vested account balance is greater than $5,000. This form gives spousal consent to the borrower's use of his or her accrued benefit in the plan to secure the borrower's loan obligations. The plan administrator or a notary public must witness the signature of the participant and spouse. Unmarried participants must certify their marital status on the spousal consent form. The plan administrator should keep this form for his or her files and does not need to mail a copy to AUL.


9. What happens if I cannot repay my loan or my employment status changes?


If so determined by the plan administrator, a default of a loan shall exist upon, but not be limited to, the occurrence of any of the following acts, events or conditions:

  • Nonpayment when due;

  • Failure to maintain an automatic after-tax payroll deduction repayment arrangement, except for approved leaves of absence;

  • A warranty or representation that is false or is believed to be false by the plan administrator;

  • Borrower makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, or becomes a subject of any wage earner plan under the Federal Bankruptcy Code as now or hereafter in effect or under any applicable state insolvency law;

  • There is started against the borrower any bankruptcy, insolvency or other similar proceeding which has not been dismissed by the 60th day after the date on which the proceeding was started, or the borrower consents to or approves of any such proceeding or the appointment of any receiver for the borrower or any substantial part of the borrower's property, or the appointment of any such receiver is not discharged within 60 days;

  • The death of the borrower;

  • Spousal consent, if required, is revoked or otherwise becomes invalid or inoperative;

  • Interruption of the borrower's status as a "party-in-interest" with respect to the plan;

  • Impairment of the value or priority of the security interest pledged by the borrower;

  • Termination of employment when the loan is not repaid in full, except for approved leaves of absence; or

  • Expiration of an approved leave of absence when not re-employed.


10. Other general information you should know.


For plan years beginning on or after January 1, 2002, EGTRRA permits loans to owner-employees of an S-corporation, sole proprietorship or partnership.

All loans must be adequately secured. For this purpose, the plan may consider a participant's vested interest under the plan to be adequate security. It shall be the policy of the plan not to make loans which require security other than the participant's vested interest in the plan.


11. Additional questions?


Please contact your plan administrator with additional questions.


 



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