See section 14 of your adoption agreement to determine if the firm elected to allow for loans in the plan.
Actively employed participants should have their loan repayments deducted from their paychecks so the loan frequency requested should match your payroll schedule.
Terminated participants are permitted to repay their loans directly to the Program (as long as you don’t have a stricter loan policy that requires that the loan be repaid in full upon employment termination). To do so, they can submit a check payable to ABA Retirement Funds Program along with a Loan Repayment Remittance Form. While they should stick to the loan payment frequency originally chosen, they can reamortize the loan to a more convenient payment frequency (such as monthly or quarterly) using the Loan Reamortization Request Form.
The loan check is sent to the firm for this reason and so that you can establish payroll deduction for the correct repayment amount. If the wrong payment frequency was chosen, you can reamortize it by submitting the Loan Reamortization Request Form.
Information on loan repayment
Any loan payments processed by the close of business on the last business day of the quarter will be reflected on the participant’s quarterly statement. Quarterly statements are mailed no later than 10 business days after the end of each calendar quarter.
Payments must equal the exact amount expected and in the frequency expected. If the payment amount exceeds the amount expected, it may be returned, as excess payments to principal may not be made.
Loans can be paid off in full at any time with no penalty.
Terminated participants may submit loan repayments directly to the Program if permitted by your firm as long as the repayment is accompanied by a Loan Repayment Remittance Form. Payments should be submitted in the expected payment amount and expected frequency. For that reason, terminated participants may want to reamortize the loan to a more convenient repayment frequency (e.g., your payroll schedule may be semi-monthly but participants want to start remitting repayments on a monthly basis). To do that, the participant may submit a Loan Reamortization Request Form.
For more information on loan repayments, see the Contributions section.