Resolution 2011-014
RESOLUTION NO. 2011- 1 4
A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF COLLIER
COUNTY FLORIDA APPROVING THE ADDITION OF THE LOAN OPTION FOR
EMPLOYEES TO THE 457 PLAN AGREEMENTS WITH ICMA-RC AND NATIONWIDE
RETIREMENT SOLUTIONS, INC.
WHEREAS, Collier County Government desires to be an employer of excellence; and
WHEREAS, the new loan option will provide Collier County an additional resource to attract,
retain and motivate employees; and
WHEREAS, the Human Resources Department recommends adding the loan option to the 457
Plan Agreements with ICMA-RC and Nationwide Retirement Solutions, Inc., for the benefit of
all employees under the Board of Collier County Government; and
WHEREAS, the loan option will provide the Collier County employees an additional resource in
order to address possible economic hardship.
NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF COLLIER COUNTY, FLORIDA that:
I. The Board of County Commissioners approves the Human Resources Department
recommendation to add a loan option to Collier County employees' 457 Plan Agreements with
ICMA-RC and Nationwide.
2. The Board of County Commissioners hereby authorizes the Chairman to execute any 457
Plan documents necessary to include the loan option for employees subject to review and
approval for legal sufllciency by the County Attorney Office.
ATTEST:
DWIGHT E. BROCK, CLERK
~",
By:
BOARD OF COUNTY COMMISSIONERS OF
COLLIER COUNTY, FLORIDA
fL~ W ~~
, C IRMAN
.' .;;
.;..- - !.t\2v". ~
. Approved as to form and legal
~:&p~-m~ 0
Assistant County Attorney
NATIONAL ASSOCIATION OF COUNTIES
DEFERRED COMPENSATION PROGRAM
THE DEFERRED COMPENSATION PLAN FOR PUBLIC EMPLOYEES
LOANS TO PARTICIPANTS AMENDMENT TO PLAN DOCUMENT
WHEREAS, PLAN SPONSOR executed the above referenced Plan Document, as
amended: and
WHEREAS, effective ;' /.;.r /oJP/J , PLAN SPONSOR now desires to further amend
I I
the plan document.
The following Section 8.06 is hereby added:
8.06 Loans to PARTICIPANTS
(a) PLAN SPONSOR has elected to make loans available to PARTICIPANTS
and has delegated certain administrative duties regarding loans from the
PLAN to the ADMINISTRATOR.
(b) Any loan by the PLAN to a PARTICIPANT under this Section shall be
subject to the loan administrative procedures established by the
ADMINISTRATOR as well as the following requirements:
(i) Loan Eligibility. Any PARTICIPANT may apply for loan under the
PLAN. A PARTICIPANT who has defaulted on a previous loan from
the PLAN shall not be eligible for another loan from the PLAN until all
defaulted loans are repaid in full, including accrued interest and fees.
(it) Loan Application and Loan Agreement. A PARTICIPANT must
complete and return to ADMINISTRATOR a loan application. A non-
refundable application fee established by ADMINISTRATOR will be
deducted from the PARTICIPANT'S ACCOUNT(s) at the time ofloan
origination. Before a loan is issued, the PARTICIPANT must enter into
a legally enforceable loan agreement as provided for by the
ADMINIST A TOR.
(iit) Loan Repayment. The PARTICIPANT receiving a loan shall be required
to furnish to ADMINISTRATOR any information and authorization
necessary to effectuate repayment of the loan prior to the
commencement of a loan. In the event that a payment cannot be
processed because of lack of sufficient funds, the ADMINISTRATOR
shall assess an insufficient funds charge, which will be deducted from
the PARTICIPANT'S ACCOUNT(s).
DC.J980-1101
(iv) Loan Term and Interest Rate. The maximum term over which a loan
may be repaid is five (5) years (fifteen (15) years if the PLAN
SPONSOR permits loans for the purchase of a P ARTICIP ANT'S
principal residence). Each loan shall be amortized in substantially equal
payments consisting of principal and interest during the term of the loan,
except that the amount of the final payment may be higher or lower. The
ADMINISTRATOR shall establish the interest rate for any loan.
(v) Loan Frequency. Each Participant may have only one (I) PLAN loan
outstanding at any given time. A PLAN loan which is in default, even if
the defaulted loan was treated as a "deemed distribution" under federal
regulations, shall be treated as an outstanding loan until such
PAR TICIP ANT'S account balance is offset by the amount of principal
and accrued interest under the loan. A PARTICIPANT will be granted a
loan no more frequently than two (2) times in any twelve (12) month
period.
(VI) Default. The PARTICIPANT must pay the full amount of each loan
payment (principal and interest) on the date that it is due. Failure to
make such a payment by the due date, or within any cure period
established by the ADMINISTRATOR, shall cause the PARTICIPANT
to be in default for the entire amount of the loan, including any accrued
interest. A loan will also be in default if the PARTICIPANT either
refuses to execute, revoke, or rescind any agreement necessary to
comply with the provisions of this Section or the loan administrative
procedures established by the ADMINISTRATOR, commences or has
commenced against PARTICIPANT a bankruptcy case, or upon the
death of the PARTICIPANT.
(vit) Loan Security. By accepting a loan, the PARTICIPANT is giving a
security interest in their vested PLAN balance as of the loan process
date, together with all additions thereof, to the PLAN that shall at all
times be equal to 100% of the unpaid principal balance of the loan
together with accrued interest.
(viiI) Loan Amount. The maximum amount of any loan permitted under the
PLAN is the lesser of (i) 50% of the PARTICIPANT'S vested account
balance less any outstanding loan balances under the PLAN or (ii)
$50,000 less the highest outstanding loan balance during the preceding
one-year period. The ADMINISTRATOR shall establish the minimum
loan amount. The PARTICIPANT and not the ADMINISTRATOR shall
at all times remain responsible for ensuring that any loan received under
the PLAN is in accordance with these limits with regard to any other
loans received by the PARTICIPANT under any other plans of the
PARTICIPANT's employer.
2
DC.J980.1101
(ix) Loan Maintenance Fee. Until a loan is repaid in full, an annual loan
maintenance fee as established by ADMINISTRATOR will be deducted
from the PARTICIPANT'S ACCOUNT(s).
(x) Loan Default Fee. At the time when a default occurs, a loan default fee
established by ADMINISTATOR will be deducted from the
PARTICIPANT'S ACCOUNT(s).
(c) The ADMINISTRATOR shall fix such other terms and conditions necessary
to the administrative maintenance of the provisions of this Section and as
necessary to comply with the IRC and regulations there under.
IN WITNESS WHEREOF, the undersigned has executed this Amendment this
day of ,20_
~H-,q~ d (l,weK. etJ"7 ~MAJ/1It"'1(//
(Name of PLAN SPONSOR) By: L,E~ b. ~.s/ vi?
3 DC.J980-11Ol
NATIONAL ASSOCIATION OF COUNTIES
DEFERRED COMPENSATION PROGRAM
PARTICIPANT LOAN ADMINISTRATIVE PROCEDURES
Nationwide Retirement Solutions, Inc. ("NRS"), as Third Party Administrator of the National Association of
Counties Deferred Compensation Program, administers your Deferred Compensation Plan for Public
Employees ("Plan"). Recently issued proposed regulations under Intemal Revenue Code Section 457 provide
that eligible govemmentaI457(b) plans may permit loans to Participants. NRS recommends that you, as Plan
Sponsor and/or Employer (hereinafter collectively referred to as "Plan Sponsor"), consult with your own legal
advisor in determining whether you wish to add this optional feature to your Plan.
In the event that you decide to offer loans from your Plan to Participants, you will need to return to NRS at
Nationwide Retirement Solutions, PO Box 182797, Columbus OH 43272-8450, Attn: Loans
Administrator a fully executed original of this document and a fully executed original of the enclosed Plan
Document Amendment. NRS cannot begin processing Participant loans from your Plan until it receives fully
executed originals of both of these documents.
NRS may need from time-te-time to make changes to the administrative procedures set forth herein and in the
Plan Document Amendment. In such a case, NRS will provide you with timely notice of such changes as they
become necessary.
The following administrative procedures shall govem the making of loans from your Plan:
1. Loan Administration. Plan Sponsor delegates to NRS certain administrative duties regarding the
administration of loans from the Plan, which are set forth herein and which may be modified by NRS upon
timely notice to Plan Sponsor.
2. Loan Eligibility. Any Plan Participant is eligible for a loan from the Plan. Each Participant is entitled to
one (1) loan at any time. In addition, a Participant who has defaulted on a previous loan shall not be eligible for
another loan from the Plan until all defaulted loans are repaid in full, including accrued interest and fees.
3. Loan Application and Loan Agreement. In order to receive a loan from the Plan, an eligible
Participant must complete a loan application and return it to NRS. A loan application fee of $50.00* will be
deducted from the Participant's account(s). Before a loan is issued, the Participant must enter into a legally
enforceable loan agreement as provided by NRS. If the Plan Sponsor permits loans for the purchase of the
Participant's principal residence, the Participant will be required to sign a Primary Residence Certificate form
and provide NRS with a copy of the contract or other documents relating to the acquisition of the dwelling unit.
If the source for a single loan includes both the Participant's Deferred Compensation and Eligible Rollover
Accounts, the Participant will be required to complete a loan application and loan agreement for each account
which will be treated as separate and distinct for all purposes herein except that they will be considered a
single loan for purposes of Sections 2, 6, and 10 herein.
4. Loan Repayment/Maximum Loan Term Repayment of any loan made to a Participant shall be made
in a manner and pursuant to the terms set forth in loan agreement. The Participant receiving a loan shall be
required to fumish the information and authorization necessary to effectuate the foregoing payments prior to
the commencement of a loan. The maximum term over which a loan may be repaid is five (5) years (fifteen
(15) years if the Plan Sponsor permits loans for the purchase of the Participant's principal residence).
* These fees, rates, and minimums are subject to change by NRS upon reasonable notice to the Plan Sponsor. Loan fees will appear
as administrative charges on Participant Statements.
OC.3983.1101
In the event that a Participant elects to receive a distribution from the Plan (other than a distribution due to an
unforeseeable emergency or other in-service withdrawal) at a time when such person has a Plan loan
outstanding, the principal and any accrued interest with respect to such loan shall be taxable.
5. Loan Amortization. Each loan shall be amortized in substantially equal payments consisting of
principal and interest during the term of the loan. Payments of principal and interest shall be made in a manner
and pursuant to the terms set forth in the loan agreement on a monthly basis in equal amounts, except that the
amount of the final payment may be higher or lower. Before the loan is made, the Participant will be notified of
the date on which the first payment will be deducted and the dates on which subsequent payments are due.
6. Loan Frequency/Renegotiations. Each Participant may have only one (1) Plan loan outstanding at
any given time. A Plan loan which is in default, even if the defaulted loan was treated as a "deemed
distribution" under federal regulations, shall be treated as an outstanding loan until such Participant's account
balance is offset by the amount of principal and accrued interest under the loan. NRS shall offset a defaulted
loan at any time that is administratively practicable, including but not limited to severance from employment by
the Participant or upon a request for a distribution from the Plan. A Participant will be granted a loan no more
frequently than two (2) times in any twelve (12) month period. Under no circumstances may loan terms be
renegotiated. A new loan shall not be granted prior to the repayment of an outstanding loan.
7. Default. The Participant must pay the full amount of each payment (principal and interest) on the date
that it is due by having sufficient funds in the account designated for loan payments through the ACH process.
If NRS is unable to process a payment on the date due because the Participant fails to have sufficient funds in
the account on that date, NRS will assess a fee of $25.00 that will be deducted from Participant's account(s)
and will send written notification to the Participant. The Participant shall be in default for the entire amount of
the loan UNLESS the Participant does each of the following: 1) contacts NRS at the Deferred Compensation
Service Center, 2) mutually agrees with NRS on a date, which is within 30 days of the missed payment on
which funds sufficient to cover the missed payment will be in the account and; 3) actually pays the missed
payment. Failure to make such a payment through mutually agreeable terms shall cause the Participant to be
in default for the entire amount of the loan. The loan also shall be defaulted upon the death of the Participant or
if the Participant commences or has commenced against Participant a bankruptcy case. No additional loans
shall be made to a Participant who has defaulted on a Plan loan and who has not repaid all defaulted loans in
full, including accrued interest and fees.
8. Loan Prepayment. The entire amount of a loan, including outstanding principal and any accrued
interest, may be paid without penalty prior to the end of the term of the loan in the manner prescribed by NRS.
However, payments made that are less than the remaining principal amount of the loan and any accrued
interest with respect to the loan, or which are not paid in the form prescribed by NRS, are not permitted.
9. Loan Security. By accepting a loan, the Participant is giving a security interest in his or her vested
Plan balance as of the date of the Loan Process Date, together with all additions thereof, to the Plan that shall
at all times be equal to 100% of the unpaid principal balance of the loan together with accrued interest.
10. MaximumlMinimum Loan Amount. The maximum amount of any loan permitted under the Plan is the
lesser of (i) 50% of the Participant's vested account balance (not including any value attributable to applicable
life insurance or deemed IRA account) less any outstanding loan balances under the Plan or (Ii) $50,000 less
the highest outstanding loan balance during the preceding one-year period. The minimum loan amount
permitted is $1,000.00*. Loans shall be made in accordance with these limits and those limits imposed under
federal regulations without regard to any other loans received by the Participant from any other investment
provider under the Plan or any other plan of the employer. The Participant and not NRS shall at all times remain
responsible for ensuring that any loan received under the Plan is in accordance with regard to any other loans
received by the Participant under any other plans of the Participant's employer. Any tax reporting required as a
.
These fees, rates, and minimums are subject to change by NRS upon reasonable notice to the Plan Sponsor. Loan fees will appear
as administrative charges on Participant Statements.
[)(,.3983.1102
result of the receipt by a Participant of a loan that exceeds the limits imposed by federal regulations shall not be
the responsibility of NRS, unless it is determined that such limits were exceeded solely as a result of a loan
made through NRS as service provider. Consequently, NRS shall not be required to account for loans made
pursuant to a plan other than this Plan or loans made under this Plan that are made by an investment provider
other than Nationwide Life Insurance Company.
11. Suspension of Loan Payments. NRS may suspend a Participant's obligation to repay any loan under
the Plan during the period in which the Participant is performing service in the uniformed services as may be
required by law. At the expiration of any suspension of loan payments period, the outstanding loan balance,
including any accrued interest and fees. will be re-amortized and the Participant will be required to execute an
amended Loan Agreement.
12. Loan Interest Rate. The interest rate for any loan shall be established by NRS. These interest rates
shall commensurate with interest rates being charged by entities in the business of lending money under
similar circumstances. Generally, the rate assumed will be Prime Rate + 1.00%*. The Prime Rate shall be the
prime rate published by the Wall Street Joumal two weeks prior to the end of the most recent calendar-year
quarter. NRS may adjust the loan interest rate for Participants entering active duty in the military services as
may be required by law.
13. Annual Loan Maintenance and Asset Fees. An annual loan maintenance fee of $50.00* will also be
deducted from the Participant's account until the loan is repaid in full. The amount of the outstanding loan
balance will be subject to the Asset Fee equal to the maximum Variable Account Annual Expense Fee
applicable under the Plan at the time the loan is issued.
14. Loan Default Fee. At the time when a default occurs, a $50.00* loan default fee will be deducted from
the Participant's account. This charge will only affect Participants who fail to make a required loan payment.
15. Loans for the Purchase of a Principal Residence. All loans issued by the Plan will be general loans
to be repaid in five (5) years unless the Plan Sponsor affirmatively elects to offer loans for the purchase of the
Participant's principal residence, which may be repaid in fifteen (15) years. Such loans shall be solely secured
by the Participant's vested account balance. All administrative procedures set forth herein shall apply to such
loans.
If the Plan Sponsor elects to permit loans for the purchase of the Participant's principal residence,
please check this box. D
The undersigned Plan Sponsor hereby adopts these Participant Loan Administrative Procedures, effective for
loans issued on or after the effective date set forth in the Loans to Participants Amendment to Plan Document.
and instructs NRS to administer loans made to Plan Participants in accordance with these terms.
The Plan Sponsor acknowledges the following: (i) that the Plan Sponsor has decided to offer loans under the
Plan and is instructing NRS to administers loans under the Plan; (ii) that it understands that. as a result of
offering loans under the Plan, the Plan Sponsor, its Participants, and/or the Plan could be subject to adverse
tax consequences; (iii) that the Plan Sponsor has independently weighed this risk and has determined that
offering loans under the Plan is in the best interest of the Plan Sponsor, its Participants, and the Plan; and (iv)
NRS shall not be liable for any adverse tax consequences described in (ii), except as specifically stated under
paragraph 10 herein, resulting from the Plan Sponsor's decision to offer loans under the Plan.
*
These fees, rates, and minimums are subject to change by NRS upon reasonable notice to the Plan Sponsor. Loan fees will appear
as administrative charges on Participant Statements.
DC.J983.1102
Plan Sponsor
or Employer:
Street Address:
60.4i\. D 0 P (1 1..-1....1 t:.A. (!.Lh) N ~
:;:'03 e. rA-m I ~rn, TI'lA-.1..
koi'PA..l\Jm~,
City, State, Zip Code: NP.P Let;. f~oRJbf+
.
Plan Name: (!J()n~ I'fP eo~e~ tou~ bbYelf.rldle.A/7 j)~ ~~efl..e.LJ ~.uo.1Ui'T"c"J /1,.,4-1f/
Entity No.: t1 () 3 (, "1.'3 (l ()O /
Plan Entity: J3o~~jj t$' ~~J ~ /!!..K ~VAl "1' ;tQy"~/C/foJ meN r
By: /)7/\. L. e 01: (5c I? s ..;/1<. .
Its: (!OUNr-1j m/J-7///lt,t:'K
E-mail Address: OP!:'c//). T7.1t L.i)~ ill It.)L-c/t'-r<:.t.;6~', iVe_t f'i-M U)or<..,{)/flI,ql'iI~
Date:
.
These fees, rates, and minimums are subject to change by NRS upon reasonable notice to the Plan Sponsor. Loan fees will appear
as administrative charges on Participant Statements.
I){'.J983.1101
A
IcMARC
BujbJjnK RetiPTmmI Security
LOAN PROGRAM IMPLEMENTATION AT-A-GLANCE
In this Loan Program Implementation Package, you will find:
. A Guitk to Implnnenting a Loan Program - This brochure details the issues you should consider in design-
ing your loan program.
. Loan Guitklints Agrummt for a &tirtmmt Plan - These guidelines must be completed befote loans can
be made from your retirement plan. This document enables you to establish the features of your loan
program.
. Sugg<Std Rtsolution for a LlgislatiVl Body &lating to Ammding a &timnmt Plan to Pnmit Loans - We
have included one version that can be used for any plan cype - Section 457 Deferred Compensation
plans, Section 401 Money Purchase plans, and Section 401 Profit-Sharing plans. If your governing body
requires that a resolution be passed when amendments arc made [Q the plan, we have included a suggested
resolution for your use. If your governing body docs not require that a rcsolucion be passed. please disre-
gard the suggested resolution.
. Loan Administration Agrmnmt for 457 Plans - This document applies only to 457 plans whete more than
one provider is involved in loan administration. If you have adopted a single 457 plan document under
which ICMA-RC and one or more other providers must operate, you may ultimately have to self-admin-
ister your loan program unless you agree to the requirements specified in this Agreement.
. Ammdmmt to 401 Plan AdDption Agrummt- This documem applies to 401 plans only and amends your
current plan [0 allow loans.
Step. to Implement a Loan Program for your ICMA-RC Retirement Plan:
(I) Carefully read A Guitk to fmpkmmting a Loan Program.
(2) Complete the Loan Guitklines Agrummt.
(3) Using the Suggested Resolution as a guide, obtain a resolution from your governing body to adopt the
loan provision (if required).
(4) Execute the Loan Administration Agrummt (457 plans only) or the Amendmrnt to Adoption Agrmnmt
(401 plans only).
(5) Rerurn the complered Loan Guitklines Agrummt, a copy of the resolution (if required by your entity),
and either the Loan Administration Agrmnmt (457 plans) or the Ammdmmt to AdDption Agrmnmt (40 I
plans) to:
ICMA-RC
Attention: New Business Analyst
777 North Capitol Street NE
Washingron, DC 20002-4240
Please allow 10 business days to set up your plan ro allow loans.
Please contacr our Client Services Team at 1-800-326-7272 if you have any questions about implementing your Re-
tirement Plan Loan Program.
A GUIDE TO
IMPLEMENTING
A LOAN PROGRAM
Bui/Jing Retirement Security
ICMA-RC
A loan program in your rerirement plan provides eligible plan
parricipams the abiliry to borrow funds from their plan account
balance. Adding loans to your retirement plan is a big step. Po.
the administrator of your loan program, ICMA-RC will at-
tempt to minimize the amount of resources you need [0 devote
to the program.
However, there are administrative and fiduciary responsibil-
ities associated with offering loana which, a.s a practical mat-
ter, cannot be delegated to ICMA-RC. For this reason, before
you design a program that is right for you and your employees.
there arc several issues you may wish [0 consider. And the: deci-
sions you make in designing your loan program will determine
the resources you, as the plan sponsor, will have to commit to
that program.
This brochure details the issues you should consider in design-
ing your retirement plan loan program.
LOAN GUIDELINES
In order to offer loans from a retirement plan, the Internal Rev-
enue Code (the Code) requires that you establish written guide-
lines that govern the granting of loans. Included in this packet
is the Loan Guidelines Agreement that you must complete and
formally adopt to establish your loan program.
Along with completing the Loan Guidtlines Agrummt, you
must amend your plan document (0 allow loans. You will need
to send (0 ICMA-RC a statement executed by a designated
official or resolution approved by your governing body, as
applicable to your plan. In addition, if you are adding a loan
provision (0 a 401 plan, the adoption agreement applying (0
that plan must be amended. A sample resolution and an adop-
tion agreement amendment form arc included in this package.
If you have any questions about amending your plan document
to allow for loans. please call our Client Services Team (Oil-free
at 1-800-326-7272.
The Code provides you with some flexibility when establishing
your Loan Guidelines as long as the guidelines arc consistent
with the plan document provisions on loans and with section
72(p) of the Code.
1. Eligibility (Section II in Loan Guidelines
Agreementl
You may allow a loan to be taken from (1) vested employer
contributions and/or (2) participant account balances. You
may designate whether or not a loan may be taken
(A) for all purposes or
(B) only in the case of hardship or other certain specified
financial situations.
401 Plam: Under the Code, only employers can authorize a
hardship for loan purposes. Upon request, ICMA-RC will
provide an opinion (0 you concerning the likely compli-
ance of the hardship within the requirements of the Code
and regulations. Normally, for loan purposes, hardship and
other specified situations include, but arc not limited to:
unreimhursed medical expenses, buying or rehabilitating
the participant's principal residence, and paying for college
education for the participant or his/her dependents. Car
loan, car repairs, and the purchase or repair of a vacation
or rental property would not be included in the hardship
definition.
The option you choose to define "loan purpose" in the Eli-
gibility section will have II significant impact on the number
of loans made from your plan. Obviously, if you choose "for
all purposes," more of your employees will request loans
than if you select "hardship or other specified financial situ-
ations only."
457 Plans: Loans must be coordinated with unforesee-
able emergency withdrawals. The emergency withdrawal
regulations under Section 457 of the Code require that an
emergency withdrawal be a resource of the "last resort." If
the participant is able to take a loan from your ICMA-RC
457 plan or any other plan you sponsor, the participant has
resources available co meet, or partially meet, the financial
need. Therefore, a participant will be required to take a loan
before taking an emergency withdrawal.
Many emergency withdrawals are not approved because the
financial need, while serious, may not meet the conditions
itemized in the 457 regulations. The ability to take a loan
will allow participants access to money that is not otherwise
available. And the repayment provisions for loans ensures
that participams replenish their accounts, thereby preserv-
ing their retirement savings.
2. Frequem;y ofLoana (Section III in Loan Guidelines
~mend
Participants may receive only one loan per calendar year.
However, you may elect to allow participants ro have: either
(A) only one loan ours tanding at a time or
(B) no more than five loans outstanding at one time.
The option you choose under Frequency of Loans will have
an impact on the number of loans made from your plan. It
may also have: a direct impact on your payroll system if you
select Payroll Deduction as a repayment option for your
participanrs. Each loan rrpaymmt for tach pay p",iod must be
accounttd fOr uparately. Repayments of multiple loans arc a
much larger burden on your payroll system (and personnel)
than a repayment of a single loan.
2
A Guide to Implnnmting a Loan Program
3. LeIlJlh of Loan (Section V in Loan Guidelines
~mentl
Generally, all loans muse be repaid wirhin five years from
th~ dat~ the loan is made. Th~r~ is an ~xception for loans
used to buy, bur not to improve or repair, a principal resi-
dence. In the case of a loan for buying a principal residence,
you may specify the number of years, not to exceed 30, over
which [he loan muse be repaid.
In det~rminlng the maximum repayment period for resi-
den[ialloans, you should be mindful [hac [he loan [erm
may ex[end beyond [he period rhe parricipam is employed
by you. If you allow employees ro caminue ro pay [heir
loans after they separate from service (see Acceleration of
Loan Repayment on the next page), repayments would
continue by the participant, through you, for the entire
rerm of [he loan (e.g., 30 years). Every payroll period, [he
participant (former employ~~) will be required to give you
a check for the periodic loan repayment amount. You then
include this amount with your next contribution submittal
ro ICMA-RC. Loan rt!paymmts may not be made dirt!ctly to
/CMA-RC by the participant. unkss you choose ACH ,ubit as
a repayment option.
4. Loan ~~ent prorpcc {Section VI in Loan Guidelines
Agreementl
All loans musc be repaid ei[her [hrough payroll deduce ion
or [hrough ACH debi[ as long as [he employee is aceivdy
employed by you. For payroll deduc[ed paymenrs,
ICMA-RC's media used for remitting contribution detail
(e.g. EZLink, magneric [ape, or diskerre) allow for [he
inclusion of loan repayment detail. Participants may pay
off [heir loans early by requescing [hac you submi[ a larger
repayment amount from their pay on their regularly sch~d-
uled repayment dates through your contribution submittals
[0 ICMA-RC. Please nore [hac no paymem dare may be
"skipped" even if [he employee has made a large paymen[ or
submitted multiple payments.
The enclosed Loan Guidelines Agreemem form allows
your plan to offer a participant the option of making loan
repayments via direct debit of the employee's bank account.
Direct debit is authorized by the participant and allows
ICMA.RC ro debi[ loan repaymenrs from [he parricipan['s
bank account via Auroma[ed Clearing House (ACH). Wi[h
[his feacure, you are free of [he burden of escablishing and
moni[oring payroll deduction and submirring of repay-
menrs ro ICMA-RC.
Please note that you will not b~ notified directly wh~n
a participant's bank account has insufficient funds for a
complete loan r~paym~nt. The EZLink loan r~ports that
will be available to you onlin~ will provide this informa-
tion. Ir is possible that participant loans may default more
often for lack of repaymenc when participants choose
ACH repaymem ra[her than payroll deduction. You may
choose to resrricr certain participants to payroll deduction
for this reason.
In implementing a loan program you should be aware that
som~ employers who offer loans through their retirement
plan have had to contend with the inability of some partici-
panrs ro repay [heir loan(s). You should be aware tha[ you
may not stop taking loan repayments from rhe employee's
paycheck - even if [he employee asks [hat repaymenrs be
scopped. Failure co payroll-deduce loan repaymenrs on sched-
ule could borh jeopardize [he e1igibiliry or qualifica[ion of rhe
entire plan as well as creare a taxable event for the parricipanr.
Likewise. if an employee is repaying [he loan [hrough ACH
debit of his/her bank account, and [he employee fails ro
make paymenrs, [his could jeopardize the e1igibiliry of your
retirement plan. Employers are ultimately responsible for
ensuring that loans are repaid according to [he loan terms.
ICMA-RC assises you by no[ifYing borh you and [he em-
ployee if a payment has not been received.
Your plan may allow terminated employees to continue to
repay [heir loans either [hrough ACH debi[ of [heir bank
account, or by giving/sending you a check each repayment
period (refer to Acceleration of Loan Repayment section
on page three). If you adop[ [his laner repayment me[hod,
you will include the r~payment amount given to you by the
former employee in your next regular employee contribu-
tion remittance to ICMA-RC.
If a participant has more than one loan outstanding at any
onc time, thcn each loan r~paymcnt must be separately
reported [0 ICMA-RC.
5. Loan .\ppIication Procedures (Section VIII in Loan
Guidp.lines ~mend
(A) Aceive Employees Only - Loans are available only to
active employees. Former employees. beneficiaries, and
alternate payees may not take a loan.
(8) Requesc Submitral- Loan requeses may be submirred
by participanrs through [he Direce Applica[ion (wri[-
ten form) or on Accoum Access. ICMA-RC's online
account program. To off~r these features, th~ employer
pre-authorizes ICMA-RC to approve loan requests.
Otherwise, all loan requests must b~ in writing, signed
by the parricipant, and approved by you, [he employer.
Under the Code, the amount of the loan may not
exceed a maximum amount. Th~ amount availabk jOr a
wan is affict,d by aU oth" wam th, participant may hav,
outstanding or has rt!cmtly paid offJrom your /CMA-RC
r~tirtmtnt plan, and any otha r~tirmzmt plans you spon-
sor. Please refer to page 7 for a worksheet illustrating
how maximum loan amounts are calculated. The loan
modding program in Account Access incorporates this
calculation automatically.
3
ICMA-HC
(C) Check Issuance - Unless you select Ditect Application
or online (Account Access) application. the participant
is required (0 SlgO acceptance of a promissory notc
evidencing the loan and a disclosure statement, which
includes an amortization schedule. Upon receipt of
an applOved loan application, ICMA-RC will ptepate
these loan documents and send them, along with the
loan check. The loan check may not be given to the
participant until all of these loan documents have been
signed by the participant. Once the loan documents
are signed. you return thcm (0 leMA-Re. Because
the promissory notc is considered a plan assct, allloao
documents must be complete and preserved by
ICMA-RC fot at least the life of the loan.
With online loans Ot Ditect Application, ICMA-RC
sends loan documents with the check to the partici-
pant. When the participant endorses the check, that
signifies acceptance of terms.
For payroll-deducted loan repayments, once a loan is
issued. your payroll department must ensure that loan
repayments ate withheld horn the employee's paycheck
each pay period. in the amount specified or the amor-
tization schedule, until the loan is repaid in full. It is
essential that the amortization schedule coincide with
YOut payroll cycle. ICMA-RC can help you detetmine
the filS[ pay date on which you should withhold loan
repaymems.
6. j\.rrpleration of Loan Rqtayment (Section X in Loan
Guidf!lines ~mentl
You have three options for determining how outstanding
loans are accelerated:
A. All loans ate due and payable in full upon the employ-
ee's separation from service. The employee may not
continue to pay ofThis/her loan once he or she sepa-
rates from service.
B. After separation from service, all loans are due and pay-
able in full as soon as the participant takes a withdrawal
of any amount from the plan.
C. After separarion from service, all loans are due and pay-
able in full only when the pallicipant withdraws his/her
entire account balance.
You should consider these options carefully, since each pro-
vision could result in a taxable event for the participant. If a
participanr does not repay the outstanding loan amount at
the time it is due, the loan is "foreclosed." This means that
the outstanding loan amoum mwt be reported by the plan
administrator (ICMA-RC) as a taxable distribution in the
year of the foreclosure.
On the othet hand, given the butdens associated with col-
lecting loan repayments from former employees, you may
not wish to maintain a potentially long term "relationship"
with former employees (especially in the case of residential
loans).
You should carefully considet the level of tesponsibility each
option emails.
7. D,.,.rned Distribution of Dplinqp.ent Loans (Section
XIV in Loan Guidplines ~mentl
Internal Revenue Service (IRS) regulations governing
pallicipant loans issued after Decembet 31, 200 I, have
provided clarification on requirements for loan processing.
The regulations have always established loan criteria such as
term and borrowing limitations. However, the regulations
now specifically illustrate how plan sponsors should treat
delinquent loans, which violate the special rules allowing
loans ro be made from retirement plan assets.
A loan typically becomes a deemed distribution when
scheduled payments are not made in adherence with the
granted "cure period." The maximum allowable cure
period is the end of the calendar quattet following the cal-
endar quarter in which the payment was due. For example.
if a participant's loan payment is due February 1 st, the
maximum cute period fot the repayment is June 30th. If
the total amount of aU delinquent payments is not received
by the end of the cute period, the loan is deemed a distti-
burion. The principal balance. in addition to any accrued
interest, is reported as a distribution (0 the IRS. However,
the taxable distribution is not the only event in conjunction
with a deemed distribution. The following negative conse-
quences occur as a result of deemed distribution.
. The deemed distribution is a taxable event. However.
it is not an actual distribution and therefore remains
an asset of the participant's accoum. The outstanding
loan balance and accrued interest are reported on the
participant's account statement.
. Repayment of a deemed distribution will not change or
reverse the taxable event.
. The loan continues to be considered outstanding until
it is repaid or "offset" using the participant's account
balance. An offset can occur only if the participant is
eligible to receive a distribution from the plan as out-
lined in your plan document.
. ICMA-RC tequites patticipants to tepay any outstand-
ing deemed distributed loan before they can become
eligible fot a new loan. The deemed distlibuted loan
and any interest accrued since the date it became a tax-
able event is taken into account when determining the
maximum amount available for a new loan.
. A recent IRS ruling requires that a participant who has
had a prior deemed distribution must make repayments
4
A Cui'" to Impkmmting a Loan Program
to a new loan through payroll deduction, Of provide
proof of adequate securicy.
Employers, as plan sponsors and fiduciaries, have an obliga-
tion to comply with plan document and loan guideline
requirements applicable to participant loans. In this regard,
loan payments must be made in accordance with the plan
document, plan loan guidelines, and as reflected in the
promissory note signed by the participant. Employers
retain this obligation if there is a loan program associated
with their retirement plan, even if participants apply for
loans online, and regatdless of the merhod of repayment -
whether participants are repaying their loans through ACH
debit or payroll deduction.
Employers who do not ensure proper loan repayment
practices in their retirement loan programs risk not only
having individual participant loans being deemed distribu-
tions, but also potentially jeopardize the tax-favored status
of the entire plan. In the extreme, plans with mismanaged
loan programs - a high occurrence of deemed distributed
loans, and/or program participants in default, for example
- may be disqualified (in the case of 40 I plans) or classified
as ineligible (for 457 plans) by the IRS. Disqualification
results in the loss of tax-deferred status for all contributions
and a possible increase in the taxable income for participat-
ing employees.
It is a plan sponsor's and plan administrator's fiduciary obli-
gation to properly manage the retirement plan and its ben-
efits. Mismanagement of a loan program may be considered
failure to meet this fiduciary obligation and may expose a
plan sponsor to litigation, in addition to being in violation
of applicable laws and regulations.
To assist plan sponsors whose plan options include loans,
ICMA-RC will provide reports of participants with pay-
ments delinquent by 30 ro 89 days, 90 or more days but
not yet deemed, and those whose loans have been deemed
distributed. ICMA-RC is committed ro supporting employ-
ers who request assistance with their loan programs in order
[0 reduce the number of delinquent loans and decrease the
occurrence of deemed distributions.
SPECIAL CIRCUMSTANCES
If you have more than one retirement plan, ICMA-RC will ad-
minister your loan program, bur you wilJ have to perform some
loan verification activities. You will also have to perform these
activities if loans are available to your employees from several
like retirement plans, such as two different qualified plans, or if
you have different eypes of retirement plans (e.g. Section 457
deferred compensation and section 401 qualified plan). The
degree of your involvement will depend on your situation.
1. Multiple pl.n.
If you offer srotra/ rtUrmtmt plans, each with its own plan
document and provisions unique to each administrator,
lCMA-RC and YOut other administrarors should be able
to administer loans because these arc distinct plans and
the loan provision applies at the plan level. However, the
Code sets a maximum on the aggregate of all loans from all
retirement plans in which the employee participates. No
provider will be able to calculate, by itself, the maximum
amount that a participant may borrow at any point in
time. Since only you, the employer, can determine the cur-
rent outstanding loan balance and the highest outstanding
loan balance in the past 12 months from all loans from any
retirement plans, you will have to calculate the maximum
amount that may be borrowed. This will involve obtain-
ing all loan amounts currently outstanding and repaid in
the last 12 months. For your convenience, ICMA-RC has
developed a worksheet to illustrate the maximum loan
amount available. [See Page 7, "Calculating the Amount
Available for a Loan."]
If you dect online loans, participants are asked to input all
outstanding loan balances in their online worksheet so that
rhe program can properly calculate the maximum amount.
Participants are on the "honor system" when they enter
other loan amounts; ICMA-RC is unable to verifY any loan
amounts associated with plans administeted by other pro-
viders. However, if there are any outstanding loans in other
plans administered by ICMA-RC, our online program will
take them into account.
2. Sin~e Retirement Plan/Multiple Providers
[f you have adopted a single retirement plan with one
master plan document under which ICMA-RC and YOut
other adminisrrator(s) must operate, then you may ulti-
mately have to self-administer your loan program, unless
you require:
. that the maximum that may be borrowed from any
provider is 50 percent of the balance with that provider
and
. rhat the loan must be repaid only to the provider
from which the loan was made.
If you do nO{ impose these requirements, you may have to
self-administer your loan program. This is because of:
. Problems calculating the loan amount.
The amount available for a loan is based, in part, on
the total accounr balance in th~ plan. Since employees
may have balances wirh more than one of the admin-
istrators, only you, the employer, can determine the
actual account balance by aggregating the balance for
each administrator.
ICMA-HC
The Code sets a maximum on the aggregate of aLlloans
from all rc[iremem plans in which the parcicipam par-
ticipatcs. Since only you can determine the current out-
standing loan balance and the highest outstanding loan
balance in the past 12 months from all loans ftom any
retirement plans. you will have: to calculate the maxi-
mum amount that may be borrowed. This will involve
obtaining ali loan amounts currendy outstanding and
repaid in the last 12 months. For your convenience.
ICMA-RC has developed a worksheet to illustrate the
maximum loan amount available. [See Page 7, "Calcu-
ladng the Amount Available for a Loan. "J
. Problems preparing loan documents.
Each loan has terms and conditions that arc reRected in
the promissory note, disclosure statement and amortiza-
tion schedule fat the loan. Other providers may be able
to prepare these documents if given all the pertinent
information about the loan by you. However, the other
provider may be reluctant [0 provide documents for a
loan to which it is nO! a parry. And it may be difficult
for the other provider's system to provide documents fOf
a loan in an amount that exceeds what its system shows
is available.
. Problems keeping accurate loan fecords.
Since loans arc generally made and recordkept on a
plan level basis, theoretically, a pallicipant could take a
loan in the amount of his/her entire balance with one
administrator because the loan is collateralized by the
balance with another administrator. And the partici-
pant may elect to allocate loan repayments either be-
tween administrators or to an administrator other than
the administrator who made the loan. Unless a loan is
unique to one of the administrators, both in amount
and repayment terms, only you, the employer, will be
able to track loan repayments, especially if repayments
are being made to more than one administrator.
3. Multiple'l:'!P"5 of Retirement PI."JM"lqpl. Providers
If you make loans available to your employees from all of
your retirement plans (e.g. Section 457 deferred compen-
sation plan and Section 401 qualified plan), each plan
administrator should be able to administer loans because
these arc distinct plans and the loan provision applies at
the plan level. However, no administrator will be able to
calculate, by itself, the maximum amount that a partici-
pant may borrow at any point in time. This is because the
Code sets a maximum on the aggregate of all loans from
all 401 and 457 plans in which the pallicipant pallici-
pates. Since only you, the employer, can determine the
current outstanding loan balance and the highest out-
standing loan balance in the past 12 months from all loans
from any 401 or 457 plans, you will have to calculate
the maximum amount that may be borrowed. This will
involve obtaining al1loan amounts currently outstanding
and repaid in the last 12 months. For your convenience,
RC has developed a worksheet to illustrate the maximum
loan amount available. [See Page 7, "Calculating the
Amount Available for a Loan."J
Many 457 plans are what arc referred to as "co-adminis-
tered" plans. There are actually two diffetent rypes of ar-
rangement both of which are referred to as co-administered
or co-provider plans:
(I) multiple 457 plans offered by an employetthrough two
or more administrators, each administrator having its
own plan document and features.
(2) a single 457 plan with multiple administrators ptovid-
ing essentially different investment options.
In both of these situations, it will be difficult fat an ad-
ministrator to correctly administer a loan provision across
multiple plans. It will also be difficult for you to correctly
administer a loan's provisions in situations where you make
loans available to employees from your 457 plan(s) and
another retirement plan (e.g. Section 401 money purchase
or profit sharing plan).
CONCLUSION
You may be able to minimize your involvement in administer-
ing a loan program under either a single plan/multiple provider
arrangement or a multiple plan arrangement. However, you
cannot avoid having to determine whether each loan amount
requested is consistent with the aggregate maximum.
The above information is intended to provide an overview of
the issues and complexities of establishing and maintaining a
loan program under the most common types of retirement plan
arrangements. It is not intended to be all inclusive. Other issues
may arise and some issues may be mitigated by a plan's indi-
vidual design. Special situations and/or solutions not discussed
above will have to be analyzed on a case-by-case basis. Please
contact ICMA-RC's Client Services Team at 1-800-326-7272
with any quesdons related to these issues.
6
A Guitk to Imp/munting a Loan Program
CALCULATING THE AMOUNT
AVAILABLE FOR A LOAN
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant ftom the Plan and all other plans sponsored by the Employer that
are qualified employer plans under section 72(p)(4) of the Code is the lesser of:
(I) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for that participant
during the one-year period ending on the: day before the date a loan is to be made. or
(2) 50% of the participant's vested account balance, reduced by the current ourstanding balance of all 401 and 457
loans from all plans for that participant.
If a participant has any loans outstanding at the rime a new loan is requested. the new loan will be limited (0 the maxi-
mum amount calculated above reduced by the total of me outstanding loans.
In addition, each loan must be collateralized, at the rime it is made, by one half of the participant's vested account bal-
ance in the plan from which the loan is being made. Therefore, the actual amount a participant may take as a loan is the
LESSER of the maximum dollar amount described above or 50 percent of the account balance.
I\I.l\iIllUI11 10,11I Al11oul1t \X'o""h~~t ' , I , ,
To estimate the maximum amount of a loan for which a participant may be eligible, calculate each step and
select the lesser of the rotal of Step I or Step 2. If the participant has had no outstanding 401 or 457 plan
loans in the last 12 months. you may enter $50,000 as the total in Step 1 and proceed to Step 2.
Step 1.
$50,000
A. $50,000 is the maximum.
B. Entet the highest outstanding loan balance during the previous 12
months from 457 and 401 plan loans.
Sup 1 ToIII/
Subtna: Ilne B nlD Line A.
Step 2.
C. Enter 50% of the present value of the total account balance
in the plan from which the loan will be issued, including any
outstanding loan balance.
D. Enter the current ourstanding 40 I and/or 457 plan loan
balance(s).
Sup 2 Totlll
Sabtna: Liac D &olD Line C.
Step 3.
E. Enter the lesser of Step 1 and Step 2 totals.
MaiJaUDl Loan AlDo1lDt . Liac E
The actual amount that may be borrowed will be calculated using the participant's account
balance on the day the loan is made.
7
LOAN GUIDELINES AGREEMENT FOR A
RETI REMENT PLAN
ICMARC
Building Retirement Security
ICMA-HC
INSTRUCTIONS
(Please refer to the previous section, "A Guide to Implementing a Loan Program")
These Loan Guidelines must be completed before loans can be made from your retirement plan. You should consider each oprion
carefully before making your selections because your sdections will apply to all loans made while the selection is in effect. If you
latcr change any provision, the changes will apply only (0 loans made after the change is adopted. Loans in existence at the time of
any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made.
Note: Ifloans are available to your employees from other plans (e.g. ocher Section 457 deferred compensation plans or other Sec-
tion 401 plans), calculation of the maximum loan amount must considet the aggtegate of all loans flOm all 401 and 457 plans
in which the employee patticipates. See the Maximum Loan Amount Wotlcsheet on page 7 of A Guitk to Implementing a Loan
Program, found in this packet.
2
Loan GujtU/in~s Agrumtnt
Name of Plan (plea.se.tate the Employu'. complete name, induding5tate):~A' A c/7! &,,,,,,,,, '"' ~ t!o II AI 7
t.OI't!I("'flIe.^,T~""/eJt... t~v"'~. rU:J/e.I014-)
Plan Type:
o 40 I (a) Money Purchase Plan
0401 Profit-Sharing Plan
~ 457 Deferred Compensation Plan
ICMA-RC Plan Number:
30.3~ OJ
I. Purpose
The purpose of these guidelines is to establish the terms and conditions under which the Employer will grant loans to participants. This is
the only official Loan Provision Documenr of the above named Plan.
II. Eligibility
Loans are available to all active employees. Loans will noc be granted to participants who have an existing loan in default.
Loans will be pro-rated among all the funds in which the participant is invested at the time the loan is made.
For 401 ~ons only:
Loans are available from the following sources: [select one or both]
o Employer Contribution Account (vc:5ted balances only)
o Participant Conttibution Account. (pre- and post-tax, if applicable, including Employee Mandatory, Employee Voluntary,
Employer Rollover, and Portable Benefits Accounts, but excluding the Deductible Employee Contribution/Qualified Volun-
rary Employee Contribution Account)
For Roth 401 (k) plans only:
A participant's Designated Roth Accounr balance can be used to secure a participant loan.
Designated Roth Account balances [sdect one]
o will not (default option) be available as a source for loans undet the Plan.
o will be available as a source fot loans undet the Plan. (Note: U.ing the Roth .ource for loans may have negative tax con-
sequences for participanu.)
For 011 pion types:
Loans are available for the following purposes: [sdect one]
t!f All purposes
o Loans shall only be granted in the event of a participant's hardship or for the purpose of enabling a participant to meet
certain specified financial situations. The employet shall approve the participant's loan application altet detetmining, based
on all relevanr facts and circumstances, that the amount of the loan is not in excess of the amount required to relieve the fi-
nancial need. For this purpose, financial need shall include, hut not be limited to: unreimbursed medical expenses of the par-
ticipant or members of the participant's immediate family, establishing or substantially rehabilitating the principal residence
of the participant, or paying for a college education (including graduate studies) for the participant or his/her dependents.
3
ICMA-HC
III. Frequency of loans [select one]
~ Participants may receive one loan per calendar year. Moreover, participants may have only one (1) outstanding loan at a time.
D Participants may receive one loan per calendar year. Moreover, no participant may have more than five (5) loans outstanding
at onc time.
IV. Loan amount
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified
employet plans under section 72(p)(4) of the Code is the kller of:
(1) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for thar participant during
the one-year period ending on the day before the date a loan is to be made, or
(2) one half of the participant's vested account balance, reduced by the curtent outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the: time a new loan is requcsted, the new loan will be limited to the maximum amount calcu-
lated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount. The: participant's requested loan amount is subject [Q downward adjustment
without notice due to market fluctuation between the rime of application and the time the loan is made.
V. Length of loan
A loan must be repaid in substantially equal installments of principal and incercst. at least monthly. over a period that does not
exceed five (5) years.
Loans for a principal residence must be repaid in substantially equal instaHments of principal and interest. at
least monthly, over a period that does not exceed [state number of years] years (maximum 30 years).
VI. Loan repayment process
Loan repayments for active employees must be through (choo.e one):
o Payroll deduction only.
I'L642(2) = 2
~ ACH debit only.
I'L642(2) = 0
o Employee may choose either payroll deduction or ACH debit.
I'L641(2) = 1
If payroll deduction repayment is allowed, and the employee wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin.. soon.. practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan.
4
Loan Guitklinc Agrument
Repaymems through payroll deduction will be sem via check Ot wire by the Employer to ICMA-RC on the following cycle
(choose one):
LJ Weekly (52 per year)
LJ Bi-weekIy (26 per year)
LJ Semi-monthly (24 per year)
LJ Monthly (I2 per year)
If ACH debit repayment is allowed. debits from the employee's designated bank accoum will begin approximately one momh fol-
lowing the date the employee's signed ACH authorization form is received and processed by leMA-Re, or, in the case of online
loans, approximately one momh following the date the loan check has been cleared for paymem. Debits will normally be made on
a momhly basis.
Loans outstanding for former employees or employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment schedule that provides that sub-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current dection of investment
options on file with ICMA-RC.
The participam may payoff all or a portion of the principal and interest early without penalty or additional fee. Extra payments
arc applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is
for the balance due.
VII. Loan intarest rate
The rate of imerest for loans of five (5) years or less will be based on prime plus 0.5%.
The rate of interest for loans for a principal residence will be based on the FHANA rate.
Interest rates are determined on the last business day of the month preceding the month the loan is disbursed. The interest rate is
locked in at the time a loan is approved and remains constant throughom the life of the loan.
The prime interest rate is determined on the last business day of each month using www.nfsn.com as the source. The FHANA
interest rate is also determined on the last business day of each month using www/bankofamerica.com as the source.
Loan interest rates for new loans taken in different months may fluctuate upward or downward monthly. depending on the move-
ment of the prime and FHANA interest rates.
The employer may modify the manner in which loan interest rates will be determined, bur only with respect to future loans.
VIII. Loan application procedure
Loans must be requested using the following method (check one):
LJ Online only: All loans must be requested online by employees through ICMA-RC's Accoum Access site at
www.icmarc.org, with Employer pre-authorization as outlined in iralics below.
If an employee is married at the time of application, and spousal consem is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing. to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan requeSt is
submitted through Account Access.
The promissory nore, truth-in-Iending rescission notice and disclosure statement are presented to the employu online
through Account Access at the rime the employee submits the loan request. The employee confirms receipt and acceptance
of rhese documents by clicking on the affirmative burrons on the Account Access program.
5
ICMA-RC
The employer hereby authonus all ftture loans requested through the online process via Account Access, as well as any requestJ
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be providd
to the Employer via reports posted on the EZLink site.
The: loan amount will generally be redeemed from the employee's account on the same day as the employee's successful
submission of the: loan request through Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not,
the loan amount will be redeemed on the next business day following submission. The loan check is generally issued on
the next business day following redemption, and will be mailed directly to the employee. The employee's presentment of
the loan check for payment constitutes an acknowledgment that the employee has received and read the loan disclosure
information provided by ICMA-RC and agrees to the terms therein.
Loan repayment will begin as soon as pracricable following the employee's presenrment of rhe loan check for payment.
-i Online and through Direct Loan application: All loans musr be requesred eirher online by employees through
leMA-Re's Account Access site at www.icmarc.org. or through the Direct Loan application. both of which require pre-
amhorizarion by the Employer as outlined in italics below.
If an employee is married at the time of application. and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing. to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent musr be received in wriring by ICMA-RC no more than ninery (90) days before rhe loan requesr is
submitted through Account Access. In the case of the Direct Loan Application. spousal consent should be sent along with
the applicarion.
The promissory note:, tcurh-in-Iending rescission notice and disclosure statement an: mailed (0 the employee along with
the issued loan check. The employ~(: confirms r(:cdpt and acc(:ptanc(: of th(:s(: docum(:n[s and t(:rms at th(: tim(: th(: (:n-
dorsed check is presented for payment.
Thr Employer hereby authorizes all ftture loans rrquested through thr online proms via Account Acms, as well as any requrstJ
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will br provided
to the Employer via reports posted on the EZLink site.
The loan amounr will generally be redeemed from the employee's account on the same day as either ICMA-RC's receipt
of a loan application (complete and in good order), or rhe employee's successful submission of the loan request through
Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not. the loan amount will b(: redeemed on the
next business day following submission. The loan check is generally issued on the next business day following redemption,
and will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes an ac-
knowledgmenr rhar rhe employee has received and read the loan disclosure informarion provided by ICMA-RC and agrees
to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
o Direct Loan application only: All loans musr be requesred rhrough rhe Direcr Loan applicarion, which requires pre-
aurhorizarion by rhe Employer as outlined in italics below.
If an employee is married at the rime of application, and spousal. consent is required by the Plan for the loan, the employ-
ee's spouse must cons~nt. in writing. to the loan and the consent must be witness~d by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC along with the Direct Loan Application.
The promissory note, trurh-in-Iending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents at the time the endorsed check is
pr(:sented for payment.
Thr employer hereby authorius all ftture loans requested on paper forms, pending review of the application by ICMA-RC. Notice
of loan issuance will br provitkd to the Employer via reports posted on the EZLink site.
The loan amoum will generally be redeemed from rhe employee's accoum on rhe same day as ICMA-RC's receipr of a loan
applicarion (complete and in good order).
6
Loan Guitklints Agrttmtnt
The loan check will generally be issued from the employee's account on the next business day following redemption. The
loan check will be mailed directly to the employee. The employee's presenrment of the loan check for payment constitutes
an acknowledgment that the employee has received and read the loan disclosute information provided by lCMA-RC and
agrees to me terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
o Loan application through the Employer: All loans must be requested in writing on an application approved by the plan
administrator. The application must be signed by the participant. The Employer must review and approve each partici-
pant's application.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement that includes
an amortization schedule prior to receiving a loan check. Loan checks will generally be issued on the next business day
following ICMA-RC's teceipt of a complete loan application. The loan check, ptomissory note, disclosute statement and
trum-in-lending rescission notice will be sent to me employer, who will obtain me necessary signatures and deliver the
check to the participant. All executed documents must be teturned to ICMA-RC within 10 calendar days from the date
the check is issued.
IX. Security/Collateral
That portion of a participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The col-
lateral amount may not exceed 50 percent of the participant's account balance at the time the loan is taken. Only the portion of the
accountpbalance that corresponds to the amount of the outstanding loan balance is used as collateral.
X. Accelaration [select one]
o All loans are due and payable in full upon separation from service.
if AJlloans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
tion from service, The amount of the oucstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
o All loans are due and payable when a participant receives a distribution of part of his/her account balance after separa-
rion from service, The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
XI. Reamortization
Any outstanding loan may be reamortized, Reamortization means changing the terms of a loan, such as length of repayment peri-
od, interest rate, and frequency of repayments, A loan may not be reamortized to extend the length of the loan repayment period to
more than five (5) years from the date the loan was originally made, or in the case of a Joan to secure a principal residence, beyond
the number of years specified by the employer in Section V above.
A participant must request the reamortization of a loan in wricing on a reamorcization application acceptable to the plan adminis-
trator. Upon processing the request, a new disclosure statement will be sent to the employer for endorsement by the participant and
approval by the employer. The executed disclosure statement must be returned to [he plan administrawr within 10 calendar days
from the date it is signed. The new disclosure statement is considered an amendment to the original promissory note, therefore a
new promissory note will not be required,
A reamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
7
ICMA.HC
XII. Refinancing existing loans
If a participant has onc outstanding loan, that loan may be refinanced. If a participant has morc than onc outstanding loan, no
loans may be refinanced. Refinancing means concurrently repaying an existing loan and borrowing an additional amount through
a new loan. Refinancing includes any situarion in which onc loan replaces another loan and the term of the replacement loan docs
not exceed the latest pcrmissable (crm of the replaced loan.
In order [0 rdinancr an existing loan, a participant must request this in writing on an application approved by the plan administra-
tor. Such request must be made at a time when the participant is eligible to obtain a loan as defined by the employer in Secrlon III
above. The amount of the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Secrion IV above.
Because a refinancing is considered a new loan, only active employees may refinance an outstanding loan.
XIII. Reduction of Loan
If a panicipant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance{s) will be deducted from the
account prior to distribution to the beneficiary{ies}. The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties. The participant's estate is responsible for taxes or penalties on the unpaid loan amount, if any. A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XIV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reRected in the promissory
note signed by the panicipant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a notice will be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is stilI unpaid at the end of the calendar quaner following the calen-
dar quaner in which the payment was due. If the total amount of any delinquent payment is not teceived by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution.
and the principal balance, in addition to any accrued interest, is reported as a distribution to the IRS. However, no money is paid
in this distribution, because the participant already has the loan proceeds.
The loan is deemed distributed for tax purposes, but it is not an actual distribution and therefore remains an asset of the partici-
pant's account. Interest continues to accrue. The outstanding loan balance and accrued interest are reported on the participant's
account scatement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance. An
offset can occur only if the participant is eligible to receive a distribution from the plan as outlined in the plan document.
Participants arc required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed disuibution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available for a new loan. New loans must be repaid through payroll deduction.
8
Loan Guitklints Agrummt
The employer is obligared by federal regulation to comply with the loan guideline requirements applicable to participant loans, and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment, and by advising em-
ployees if loans arc in danger of being deemed distributed. The tax-qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XV. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All applicable fees will be debited
from the participant's account balance and/or from the participant's loan repayments prior to crediting the repayment of principal
and interest to the participant's account. A schedule of fees applicable to this plan is specified in ICMA-RC's current publication of
Making Sound lnv(stmrot D(cisiom: A &tirnnrot Invntm(nt Guiek.
XVI. Other
The employer has the right to set other terms and conditions as it deems necessary for loans from the plan in order to comply with
any legal requirements. All terms and conditions will be administered in a uniform and non-discriminatory manner.
In Wimess Whereof, the employer hereby caused these Guidelines to be executed this
day
of
,20
EMPLOYER
Accepted: ICMA RETIREMENT CORPORATION
By:
By:
J. "t> E. l? ",1i.S', I77t.
Title: t'A/I/AJ"7 /J?1ihI/~ J'" A
Attest:
Title:
A[[es[;
9
LOAN ADMINISTRATION AGREEMENT
FOR SEGION 457 DEFERRED
COMPENSATION PLANS
ICMA-RC 457 LOAN
ADMINISTRATION AGREEMENT
This Agrccmem is not required if you have 1)anly one 457 plan provider or 2)more than one plan provider each with
its own plan document and provisions unique (0 each provider. The Agreement only applies if you have adopted a
single 457 plan document under which ICMA-RC and one or more other provider(s) must operate. Please refer
(Q pages 5-6 of A Cui'" to Impkmmting a Loan Program for more details.
This Agreement shall serve as an Addendum to the Loan Guidelines established by the Employer identified below as
an Addendum to the Administrative Services Agreement (ASA) made by and between the ICMA Retirement Corpora-
tion (ICMA-RC) and the Employer.
The Employer currendy sponsors a secrion 457 deferred compensation plan administered by (wo or more providers
(co-provider plan). In order (Q ensure the efficient administration of the loan program established by the Employer,
the Employer hereby agrees and declares that
(1) For purposes of issuing loans from the plan, that portion of the plan's assets administered by
ICMA-RC will be tteated as rhough it wete a sepatate and distinct plan.
(2) The Employer shall calculate the amount a patticipant may borrow from the ICMA-RC administeted
poction of the plan. No loan amount may exceed the lesser of (a) the maximum loan amount specified
in Internal Revenue Code section 72(p)(2)(A) Ot (b) 50% of the participant's ICMA-RC-administered
account balance.
(3) Atlloan repayments must be made to the participant's ICMA-RC-administered account for the life of
the loan.
AGREED as of the day of ,20
Name of Employer: (3ohit..O ~ &,' ,"'-Ai'. &uA/~ 6cy.
Authorized Official - Ptint Name
Sta,e: r/i"JIe'lb# /..,"()EO~:;, .t!o~""ry /J1RW~~
Employe, Plan Numbet ~
Signature of Authorized Official
lCMA RETIREMENT CORPORATION
~~ C'~llo~
Angela Montez
Assistan t Secretary
Mail this Agreement and the completed 457 Plan Loan Guidelines to:
ICMA-RC
Attention: New Business Analyst
m North Capitol Street, NE
Washington, DC 20002-4240