If you are a participant of the Defined Contribution Plan of the I.B.E.W. Local 697 AND have a current outstanding loan (meaning your loan has not been deemed) AND have yet to complete and return to the Fund Office, your authorization form that was provided within the Fund’s mailing to you of May 9th, 2024, do so now.
Living on the Edge?
Are you busy? Of course you are. We all are. But as you are well aware, time moves pretty fast, and even faster when you are busy. Nevertheless, if you do not pay attention to this now, you could inadvertently forget and cause your loan to be deemed.
You don’t want that.
And as evidenced by the individual letter we wrote you about this and the other communications on this matter, neither do we.
Now, if you misplaced or lost that form, the Fund highly recommends that you request another, complete it right away, and then return it to the Fund Office prior to the Blackout /Freeze period ending, so it can make certain that said information is entered correctly and that your future loan payments remain current.
But let’s say you ignore that letter, this newsletter piece, and the other communications on this subject and don’t want the Funds assistance, what happens?
We still have your back. That is…., until we can’t.
The good news is that the Fund has ensured that all loan participants will have the functionality within both the Empower website and mobile app to electronically update their loan repayment bank account details - see, the new platform is already better than the last one!
The bad news is that we cannot do that for you, and more importantly:
- Updating this information electronically can only be accomplished after the Empower accounts go live. Which again, is after the close of the blackout / freeze period the week of June 16th. And equally important,
- You must do so prior to your loan becoming deemed. Which means that you must update your loan information prior to the Fund’s permissible “cure” period lapses.
What is the cure period? Well, when a participant fails to make an installment payment when due, the Fund provides a cure period in which a participant can bring their loan current. That IBEW Local 697 Defined Contribution loan cure period extends to the maximum permissible by federal law, which is to the last day of the calendar quarter following the calendar quarter in which the installment payment was due.
More Good News About this Feature
Not only will this feature also allow you to make a one-time payment on your loan or pay ahead and in certain instances will allow you to resolve late loan payments matters, but it is extremely easy to use. Just follow the steps below:
- Log on to your account.
- Click on Account, then your retirement plan name, then Overview
- On the Account Overview page, click Loans.
- Select your loan, then click Change existing payments.
- Click on Edit Bank Account to update your bank account information.
- If you do not have banking information on file yet, you may select Use a new bank account to add the account and set up ACH loan payments.
Two things occur if your loan is deemed.
Participants are advised that the first item is a certainty and established by the Internal Revenue Service (IRS). The second item is a possibility, is a Fund rule and dependent on the participant’s previous loan history.
- Pursuant to Internal Revenue Code (IRC), if your loan repayments are not made at least quarterly, the remaining balance is treated as a distribution that is subject to income tax and may be subject to the 10% early distribution tax.
- If a participant fails to pay themselves back two previously defaulted loans they will not be permitted to borrow again until at least one of the loans has been paid back.