To the extent the Committee has resolved to adopt a loan program
pursuant to Section 7.3 of Schedule A, this § 50-7.3 shall
apply.
A. Eligibility. Participants who are active employees, and, if the Committee
shall determine, participants who are on an approved leave of absence
from their employer, shall be eligible to request a plan loan. Each
participant shall have only one outstanding plan loan at any time.
Upon the request of a loan-eligible participant, the administrative
service agency may, on such terms and conditions prescribed herein,
direct the Trustee to make a plan loan to such loan-eligible participant.
B. Loan amount. The principal amount of any plan loan shall be for an
amount equal to at least $1,000, or such other amount as the Committee
shall determine, and shall not exceed the lesser of:
(1) Fifty percent of the value of the sum of the participant's accounts
[including his or her before-tax deferral account and Roth account
(to the extent applicable)]; and
(2) Fifty thousand dollars reduced by the highest value in the last 12
months of any loans by the participant from the plan and other eligible
retirement plans sponsored by the employer or in which the employer
participates.
C. Repayment period. All plan loans, other than those for the purpose
of acquiring the dwelling unit which is, or within a reasonable time
shall be, the principal residence of the participant, shall be repaid
over a nonrenewable repayment period of five years. A plan loan made
for acquiring a principal residence shall be repaid over a nonrenewable
repayment period of up to 15 years, or such shorter term as the Committee
shall determine. Any plan loan shall be repaid in substantially equal
installments of principal and accrued interest that shall be paid
at least monthly or quarterly, as specified by the Committee, subject
to the methods and procedures as shall be determined by the administrative
service agency.
D. Rate of interest. Each plan loan granted shall bear a rate of interest
equal to one percentage point above the prime interest rate as published
in the Wall Street Journal on the last business day of the month preceding
the application for the loan, or such other reasonable rate of interest
as the Committee shall determine.
E. Source of loans; security. The Committee shall be required to designate
under Section 7.3(e) of Schedule A the source(s) of plan loans. Plan
loans shall be made solely from the source(s) designated by the Committee.
All plan loans shall be made from the trust fund and notes evidencing
such obligations shall be considered assets of the trust fund and
shall be treated as a separate loan investment fund for purposes of
determining the value as of any valuation date of a participant's
accounts. All plan loans shall be secured, as of the date of the plan
loan, by the sum of (i) the participant's before-tax deferral account
and Roth account (to the extent applicable) and (ii) the participant's
rollover accounts, if applicable; provided, however, that no more
than 50% of the aggregate value of such participant's accounts shall
be used as security for the plan loan.
F. Default. If a participant fails to make any scheduled repayment of
his or her plan loan within the loan grace period, such participant
shall be considered in default and the administrative service agency
shall declare a deemed distribution to have occurred with respect
to such plan loan, effective as of the date of the default, and shall
reduce the value of the participant's plan benefit by the amount of
the deemed distribution. Notwithstanding anything in this § 50-7.3
to the contrary, a participant who has defaulted on a loan made under
the plan shall not be eligible to obtain another loan hereunder until
the defaulted loan and accrued interest has been repaid, and the new
loan shall be subject to any other limitations required under Section
1.72(p) of the Treasury regulations.
G. Outstanding loans. An outstanding loan shall include:
(1) Any loan that is being repaid in compliance with this § 50-7.3
until repaid in full; and
(2) Any loan that is considered in default until subsequently repaid
in full.
H. Administration and fees. The Committee may establish or change from
time to time the standards or requirements for making any plan loan,
including assessing an administrative fee against the participant
or the participant's account for such plan loan.
If a participant dies prior to the payment of any withdrawal for an unforeseeable emergency, distribution of a small, inactive account or disbursement of the proceeds of any plan loan, the participant's withdrawal, distribution or loan request shall be void as of the date of death and no withdrawal, distribution or disbursement shall be made by operation of Article
VII to the participant's beneficiary or estate.