Aside from the many advantages of using MyPlanLoan, there are two distinct differences that MyPlanLoan offers over traditional payroll deduct loans:
In a traditional loan environment, the participant repays their retirement plan loan through standard payroll deductions. MyPlanLoan removes loan administration from the payroll and human resources departments. Participants also have greater flexibility to pay off their loan(s) sooner, if they wish.
MyPlanLoan provides participants with the ability to pay back their retirement plan loan even after they terminate employment, under the original loan terms. The MyPlanLoan Continuation Program is a third option to immediate payoff or loan default after separation from employment. With traditional loan defaults rates hovering at 80% (Source: Vanguard research, 2007), this option can potentially save participants thousands of dollars in taxes and penalties.
More than just a solution for New Loans
The MyPlanLoan solution provides plan sponsors with the option of transferring existing traditional (payroll deduct) loans to MyPlanLoan for invoicing, repayment, and ongoing administration, in addition to having all new loan requests entered through MyPlanLoan.
MyPlanLoan truly provides the best of both worlds, offering the most unique and sensible loan solution for retirement plan sponsors and participants.