Louisiana Administrative Code › Title 32 - EMPLOYEE BENEFITS › Part VII - Public Employee Deferred Compensation › Subpart 1 - Deferred Compensation Plan › Chapter 11 - Participant Loans › Section VII-1107 - Loan Terms and Conditions

Current through Register Vol. 50, No. 6, June 20, 2024
A. In
				  addition to such rules as the administrator may adopt, which rules are hereby
				  incorporated into this plan by reference, all loans to participants shall
				  comply with the following terms and conditions.
1. Loans shall be available to all
				  participants on a reasonably equivalent basis.
2. Loans shall bear interest at a reasonable
				  rate to be fixed by the administrator based on interest rates currently being
				  charged by commercial lenders for similar loans. The administrator shall not
				  discriminate among participants in the matter of interest rates, but loans
				  granted at different times may bear different interest rates based on
				  prevailing rates at the time.
3.
				  Each loan shall be made against collateral, including the assignment of no more
				  than one-half of the present value of the participant's total amount deferred
				  as security for the aggregate amount of all loans made to such participant,
				  supported by the participant's collateral promissory note for the amount of the
				  loan, including interest.
4. The
				  participant shall be required, as a condition to receiving a loan, to enter
				  into an irrevocable agreement authorizing the employer to make payroll
				  deductions from his or her compensation as long as the participant is an
				  employee and to transfer such payroll deduction amounts to the trustee in
				  payment of such loan plus interest. Repayments of a loan shall be made by
				  payroll deduction of equal amounts (comprised of both principal and interest)
				  from each paycheck, with the first such deduction to be made as soon as
				  practicable after the loan funds are disbursed; provided, however, a
				  participant may prepay the entire outstanding balance of his loan at any time;
				  and provided, further, that if any payroll deductions cannot be made in full
				  because a participant is on an unpaid leave of absence or is no longer employed
				  by a participating employer (that has consented to make payroll deductions for
				  this purpose) or the participant's paycheck is insufficient for any other
				  reason, the participant shall pay directly to the plan the full amount that
				  would have been deducted from the participant's paycheck, with such payment to
				  be made by the last business day of the calendar month in which the amount
				  would have been deducted.
5. A loan
				  to a participant or beneficiary shall be considered a directed investment
				  option for such participant's account balance.
6. No distribution shall be made to any
				  participant, or to a beneficiary of any such participant, unless and until all
				  unpaid loans, including accrued interest thereon, have been satisfied. If a
				  participant terminates employment with the employer for any reason, the
				  outstanding balance of all loans made to him shall become fully payable and, if
				  not paid within 30 days, any unpaid balance shall be deducted from any benefit
				  payable to the participant or his beneficiary. In the event of default in
				  repayment of a loan or the bankruptcy of a participant who has received a loan,
				  the note will become immediately due and payable, foreclosure on the note and
				  attachment of security will occur, the amount of the outstanding balance of the
				  loan will be treated as a distribution to the participant, and the defaulting
				  participant's accumulated deferrals shall be reduced by the amount of the
				  outstanding balance of the loan (or so much thereof as may be treated as a
				  distribution without violating the requirements of the Internal Revenue
				  Code).
7. The loan program under
				  the plan shall be administered by the administrator in a uniform and
				  nondiscriminatory manner. The administrator shall establish procedures for
				  loans, including procedures for applying for loans, guidelines governing the
				  basis on which loans shall be approved, procedures for determining the
				  appropriate interest rate, the types of collateral which shall be accepted as
				  security, any limitations on the types and amount of loans offered, loan fees
				  and the events which shall constitute default and actions to be taken to
				  collect loans in default.
8.
				  Security for Loan. Any loan to a participant under the plan shall be secured by
				  the pledge of the portion of the participant's interest in the plan invested in
				  such loan.
9. Default
a. In the event that a participant fails to
				  make a loan payment under this Article IV by the end of the calendar quarter
				  following the calendar quarter in which such payment was due, a default on the
				  loan shall occur. In the event of such default:
i. all remaining payments on the loan shall
				  be immediately due and payable;
ii.
				  interest will continue to accrue on the unpaid balance until the loan is repaid
				  in full; and
iii. the participant
				  shall be permanently ineligible for any future loans from the plan unless, in
				  the administrator's sole discretion, the participant is deemed to be credit
				  worthy and agrees to repay the loan through payroll deduction.
b. In the case of any default on a
				  loan to a participant, the administrator shall apply the portion of the
				  participant's interest in the plan held as security for the loan in
				  satisfaction of the loan on the date of severance from employment. In addition,
				  the administrator shall take any legal action it shall consider necessary or
				  appropriate to enforce collection of the unpaid loan, with the costs of any
				  legal proceeding or collection to be charged to the account balance of the
				  participant.
c. Notwithstanding
				  anything elsewhere in the plan to the contrary, in the event a loan is
				  outstanding hereunder on the date of a participant's death, his or her estate
				  shall be his or her beneficiary as to the portion of his or her interest in the
				  plan invested in such loan (with the beneficiary or beneficiaries as to the
				  remainder of his or her interest in the plan to be determined in accordance
				  with otherwise applicable provisions of the plan).
10. Loans shall not be available for a period
				  of 30 days following the repayment of a previous loan from the plan.