Finally . . . the Right Solution for Retirement Plan Loans
Sean K. Arnold, Product Manager
Phone: 315.292.6941
E-mail: sarnold@bpas.com
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Should loans be offered?
Do loans contribute to increased participation and savings rates?
If loans are offered, is the 72(p) limit a prudent loan limit?
Can the payroll department effectively administer the plan’s loan provision?
Do loans promote leakage of terminated participant plan assets?
Effect on Participant’s
Retirement Income
No Leakage
$5,000 Partial
Cash out
%
Account
Balance at
Age 65
$587,500
99.9
$552,597
94.0
$544,658
92.6
$588,049
$587,756
100.0
$562,860
95.7
$555,013
94.4
$588,049
$587,873
100.0
$572,064
97.3
$565,968
96.2
Average
Annual
Earnings
Account
Balance at
Age 65
Account
Balance at
Age 65
35
$36,546
$588,049
45
$58,606
55
$80,252
Age
$5,000 Hardship
Withdrawal
$5,000 Loan
SOURCE: United States Government Accountability Office, GAO-09-715
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%
Account
Balance at
Age 65
%
The solution to help stem the tide of Plan Leakage
 Loans
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not repaid
Offer MyPlanLoan Continuation, which provides a terminated participant with the
option to continue to repay outstanding loans
 Withdrawals
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Offer MyPlanLoan with a maximum loan limit less than 72(p) for active
participants and ensure that loans are exhausted before in-service withdrawals
(hardship and non-hardship) can be requested
 Cash
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during active employment
outs upon termination of employment
Offer MyPlanLoan Non-Revolving Loan program to terminated participants to
encourage keeping their retirement savings intact, with the potential availability
to borrow from their account in the event of need
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Traditional Loans
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HR department handles much of the process
Loan payments deducted each payroll cycle
Issues with payroll deducted loan payments are common
Upon termination, participant must either repay within 90 days or
be forced to default
MyPlanLoan
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HR “gets out of the loan business”
BPAS assumes entire process for loan administration
Participants make payments directly to BPAS each month
Participant can pay additional amount of principal at any time
Solution for terminated participants to help prevent default
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Traditional
Loan
MyPlanLoan
Continuation/
Administration
MyPlanLoan
Revolving
MyPlanLoan
Non-Revolving
Repay After Termination
No
Yes
Yes
Yes
New Loans Allowed –
Active Participants
Yes
N/A
Yes
Yes
New Loans Allowed –
Terminated Participants
No
N/A
Yes
Yes
Payroll Deducted Loan
Payments
Yes
No
No
No
Revolving Balance
No
No
Yes
No
Access Card Provided
No
No
Yes
No
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Benefits of the Program
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Solves the immediate “payoff or default” dilemma at termination
Terminated participants with an outstanding traditional (payroll deduct) loan can elect
to transfer repayment to MyPlanLoan
How the Participant is notified
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Eligible participant receives letter from BPAS
Terminated participant signs and returns Agreement to BPAS
Traditional loan(s) transferred to MyPlanLoan
Participant Fees/Costs
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MyPlanLoan Maintenance Fee - $4/month
Transactions Fees
 $2/check or money order received
 $2/monthly paper statement
 $20/returned payment
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Benefits of the Program
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Solves the loan administration dilemma for HR departments
All eligible loans for both active and terminated participants are transferred to MPL
for invoicing and repayment
How the Program is set up
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Plan selects option during MyPlanLoan setup process. Coordinated by MyPlanLoan
Account Representative to determine effective date of transfer, timing of last payroll
deduct loan payment, and participant notification
Plan level decision to transfer all existing traditional loans to MPL; no participant
action required
Participant Fees/Costs
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MyPlanLoan Maintenance Fee - $4/month
Transactions Fees
 $2/check or money order received
 $2/monthly paper statement
 $20/returned payment
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Benefits of the Program
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Provides option for both active and terminated participants in the plan to request a
new non-revolving loan; one loan outstanding at a time
Encourages participant to retain their retirement account as an investment
How the Program is set up
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Online application process completed by participant eligible to request a loan
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Approved loan proceeds are sent to the participant through an ACH to their banking
account
Participant Fees/Costs
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MyPlanLoan Maintenance Fee - $4/month
Transactions Fees
 $2/check or money order received
 $2/monthly paper statement
 $20/returned payment
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Benefits of the Program
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Multiple loans for participants. All loan administration is handled by MyPlanLoan
Approved loan amount is transferred to a Money Market fund within the plan. Funds
are withdrawn from the plan when the participant uses their MyPlanLoan access card.
The balance of the funds remains in the plan continuing to earn tax-deferred dividends
for the participant
How the Program is set up
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Online application process completed by participant eligible to request a loan
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Participant receives a MyPlanLoan access card. Each time the participant uses the
card a loan is created in the MyPlanLoan system
Participant Fees/Costs
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MyPlanLoan Service Fee for each card usage – 2.7%
MyPlanLoan Maintenance Fee - $3/month
Transactions Fees
 $2/check or money order received
 $2/monthly paper statement
 $20/returned payment
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Services under MPL Maintenance Fee
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Monitor 72(p) limit rules for each loan
Payment clearing, processing and remittance to appropriate custodian
Participant call center
Participant notifications
Defaulted loan processing
Office of Foreign Assets Control (OFAC) and audit support
Services under 2.7% Service Charge (Revolving Loans ONLY)
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Card fulfillment
Recordkeeping of daily transactions
Monetary settlement with card provider
Fraud monitoring and research
Card re-issue if lost or stolen
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New MyPlanLoan Request
(Revolving and Non-Revolving)
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Participant logs into recordkeeper’s Participant
website
Eligibility determined and available options
displayed
Participant requests a MyPlanLoan account
Participant completes 6 step application process
Online Maintenance of MPL Account
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View loan details, amortization schedules,
account balances, and payment history
View statements and make payments
Enroll in E-Delivery and recurring monthly ACH
payments
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Dedicated Participant Call Center
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Monday – Friday
9am – 5pm ET
Inbound/Outbound calls
Missed Payment Notification
Letter - 30, 60, 90 days
 Phone call and letter - Prior to
default date
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Bilingual
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English and Spanish
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Allows terminated participants to continue making loan payments without the
“pay off or default” dilemma seen in payroll-deducted loans
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Non-Revolving and Revolving programs provide loan availability for terminated
participants
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Revolving program provides for loan access when traditional loan
administration systems are not responsive
 Natural disasters (i.e., Katrina)
 Unforeseen emergencies (i.e., car repair)
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Loan availability in workplace environments where plan loans might otherwise
not be available
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Flexibility in the ability to make additional, off-cycle loan payments
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Allows Sponsor and HR department to “get out of the loan business”
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Flexible program options allow sponsors to provide the loan option that is best for their
participants, both active and terminated
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Ability to offer loans without payroll support requirements
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Control to set loan availability and limits by employment status
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A compassionate HR benefit for participants, many of whom are involuntarily terminated
or terminate for good reason
 Layoffs
 Disability
 Retirement
 Family care
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No cost for Plan Sponsor to add or maintain the program
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There is a $250 de-conversion fee charged if the plan decides to stop offering the
program (functional costs associated with final reconciliation and to provide
recordkeeper /sponsor with data files for outstanding loans)
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Contact your representative at BPAS
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Decide which MPL program(s) are best for your participants
 Loan Continuation – recommended for all plans
 Loan Administration – transfer of existing plan loans
 Non-Revolving Loans – active and/or terminated participants
 Revolving Loans – access cards for active and/or terminated
participants
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Amend Plan’s Loan Policy to include MyPlanLoan
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Communicate MyPlanLoan availability to plan participants
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Spend less time and resources on loan administration!
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Benefit Plans Administrative Services, Inc. is a subsidiary of
Community Bank System, Inc. (NYSE listed: CBU)
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Offices in:
 NY: New York City, Syracuse, Utica
 IL: Chicago
 NJ: East Hanover
 PA: Philadelphia, Pittsburgh
 TX: Houston
250 employees providing:
 TPA services – MyPlanLoan/AutoRollovers (EGTRRA distributions)
 Actuarial Services (dedicated staff of 26 actuaries)
 Institutional Trust (CIF administration)
 VEBA/HRA, Flex services
MyPlanLoan contact: Sean K. Arnold, Sales
 (315) 292-6941 / sarnold@bpas.com
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