Defined Contribution Plan Loan Program The Board of Trustees of the Northern California Construction Workers Trust Funds Defined Contribution plan have conceptually approved adding a provision for loans
to qualifying participants with a planned effective date of July 1, 1998. The provisions allow for loans to be made for the following purposes only:
- Unreimbursed medical, dental or legal expenses;
- Acquisition of Participant's primary residence;
- Home improvement loan on Participant's primary residence;
- Prevention of foreclosure on Participant's primary residence;
- Automobile loan for participant or a member of the Participant's immediate family; or
- Payment of books, tuition and related educational expenses of Participant or a member of the Participant's immediate family.
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Some highlights of the provision are:
- The minimum loan amount which shall be made is $1,000.00
- Loans made shall be limited to the lesser of $50,000.00 or one half of the present value of the non-forfeitable accrued benefit of the Participant's Account under the Plan.
- Loans shall provide for level amortization with payments to be made monthly over a period not to exceed five years (exception when aquiring a dwelling unit).
- Loans shall not be granted to any Participant that provide for a repayment period extending beyond such Participant's Normal Retirement Date.
- Proceeds of the loan will be issued directly to the applicant.
- Participants are borrowing "their own money", however it is a loan that is to be repaid, otherwise the loan is deemed a distribution by the Internal Revenue Service and tax consequences
result.
Implementation of the loan program is being worked on by Plan staff, advisors and the loan program administrator. The Trustees have engaged Union Loan Processors to administer this program. Details
requiring final decision will be provided the Board of Trustees in laye May. All Plan Participants will receive a special mailing in June further descibing policies, procedures and provisions, as approved by
the Joint Board of Trustees. |
