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 reamortization
Occasionally, a need may arise for the participant to reamortize the terms of an existing loan. For example, the participant may terminate employment with the firm and want to continue paying back the loan on a monthly, rather than semi-monthly basis.
An important note: The term of a loan may be extended beyond its original due date, even if the original term of the loan was less than the maximum allowed (e.g., for a general loan the maximum term is five years and for a residential loan the maximum term is 30 years). However, in no event may the new loan term exceed the maximum period from the loan’s issuance date.
The loan cannot be reamortized using a different interest rate.
How to complete the Loan Reamortization Request Form
In order to reamortize an existing loan, the participant will need to complete a Loan Reamortization Request Form and submit it to you for your review and for signature by the authorized plan representative. The participant should complete Sections 2 and 3 and sign/date the form in Section 4. If applicable, spousal consent should be obtained in Section 5.
The authorized plan representative completes section 1 and signs/dates the form in section 4. If you want the Program to issue a copy of the new amortization schedule, please complete the information on the line provided in the second paragraph on page 1.
Once the Program receives the completed, signed Loan Reamortization Request Form, we will send you a new amortization schedule by fax if you have requested one so that you may update your payroll records with the new payment amount/terms or provide those terms to a terminated participant. You can always use your Sponsor Web access to view the new loan terms.
Processing loan reamortization requests
Upon receiving the completed, signed Loan
Reamortization Request Form, the Program will update the loan records with the
new loan terms. At that time, the participant (or the firm) may begin sending
payments under the new amortization schedule.