MyPlanLoan provides a value-added service for plan sponsors to offer their participants and simplifies administration of plans offering loans.
Did You Know?
- Nearly 24% of eligible participants currently have an outstanding retirement plan loan (source: PSCA’s 54th Annual Survey of Profit Sharing and 401(k) Plans, 2010)
- Participants permitted to take multiple loans are more likely to borrow smaller amounts (source: Lu and Mitchell, 2010)
- 80% of participants with loans outstanding default after terminating employment (source: Vanguard research, 2007)
- Companies report up to a 10% increase in plan participation and/or contribution rates when 401(k) plans offer a loan feature (source: Utkus and Yang, 2007)
- The average outstanding loan balance was $8,619 in 2010 (source: PSCA’s 54th Annual Survey of Profit Sharing and 401(k) Plans, 2010).
How We Help Plan Sponsors
- Relieves the payroll department of loan administrative work, freeing staff to do other, more profit-generating work for the company
- Total outsourcing of loan repayments and default counseling through a paperless process
- Reduces potential errors in setting up or applying manual loan payments
- Loan limits can be set at below 72(p) limits to ensure that loans are offered prudently
- Gives HR a compassionate loan continuation benefit for participants, many of whom are involuntarily terminated or terminate for good reason (e.g., Layoffs, Retirement, Disability, Family Care)
- Provides company with a way to offer participants a benefit that has been proven to help increase plan participation (10% on average, Source: Vanguard research, 2007).
How We Help Participants
- Provided the terminated participant has a vested account balance of more than $5,000 in the plan, s/he can make loan payments post-employment
- A viable alternative for terminated participants vs. defaulting on the loan and being subject to significant tax penalties
- Participants can make accelerated loan payments at any point; they are not limited to the rigid amortization schedule of traditional payroll deduct loans