The MyPlanLoan Program solution provides a value-added service for recordkeepers to offer their plan sponsors, and simplifies administration particularly for plans offering multiple loans. Plan sponsors can choose whether to offer single or multiple loan options to their participants. Participants have their approved loan funds deposited into a designated checking or savings account for immediate use.
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 Recordkeepers/TPAs
Reduce leakage of assets from terminated participant accounts - the ability to continue repaying on their outstanding loans gives terminated employees a reason to leave their assets in the plan
Improve the efficiency of contribution processing by eliminating incorrect payroll deducted repayments
Provide a value-added service to plans where payroll deduction is not a viable option
Especially useful in multi-employer plans (multiple payrolls) and plans with low hourly rate/commissioned/high turnover participants
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
Gives HR a compassionate loan continuation benefit for terminated employees, 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).