Loans

Question 1

How much is ppt allowed to take in loans?

Answer 1

Lesser of: 50% vested account balance or

$50,000 reduced by the highest outstanding loan amount in last 12 months

Question 2

Factors that impact the amount available

Answer 2

Are all sources/funds available?
What is ppt vested balance?
How many loans are allowed?
Time frame between loans?

Question 3

loan from fixed fund and only allowed to borrow 50% of this fund

Answer 3

collateral loan

Question 4

4 ways a loan can be approved

Answer 4

PSOL, PA non-PSOL, DIV (TRS), NA

Question 5

make extra payments, can pay off at any time; if default, cannot take another loan

Answer 5

coupon repayment

Question 6

Cannot make extra payments, all payments set up at ER, can pay off at any time, if default can take another loan if plan allows

Answer 6

payroll deduction repayment

Question 7

Counts as outstanding loan, reduces loan amount available, doesn’t affect credit rating

Answer 7

defaulted loan

Question 8

pension plans are subject to:

Answer 8

ordinary income taxes and excise taxes

Question 9

Qualifying for a tax-free withdrawal of Roth money requires a ppt to meet a right reason and right number of years

Answer 9

age 59 1/2, death, disability

5 years

Question 10

ppt is allowed to withdrawal amount needed to meet hardship plus additional amount to pay taxes

Answer 10

gross up amount

Question 11

under safe harbor method of determining hardship

Answer 11

taking a loan is the absolute requirement, no exceptions

Question 12

age 35 hardship withdrawal

Answer 12

10% optional, 10% excise

Question 13

age 55 inservice withdrawal

Answer 13

20% requires, 10% excise

Question 14

MP, PS, 401(k), 403(b)

Answer 14

5329

Question 15

check made payable to new provider

Answer 15

direct rollover, transfer

Question 16

amount withdrawn an be different from the amount rolled over

Answer 16

indirect transfer

Question 17

distributable event

Answer 17

death, disability, hardship, in service withdrawal, term of employ/plan or retirement

Question 18

may designate catch up

Answer 18

Roth

Question 19

Always have to pay taxes on gains,
contributions do not count towards the 402(g) limit,
When contributions are withdrawn they are not taxable

Answer 19

voluntary after tax money

Question 20

May not have to pay taxes on gains,
contributions count towards 402(g) limit
when contributions are withdrawn they are not taxable

Answer 20

Roth after tax money

Question 21

5 years/30 years

Answer 21

maximum time for personal/home loans

Question 22

Erisa Rate

Answer 22

prime plus 1%

Question 23

Non-Erisa rate

Answer 23

6%

Question 24

can use your salary & not be taxed, not have to Qualify, easy to get, most of the interest goes back into acct

Answer 24

advantages of taking loan

Question 25

interest is not tax deductible, pay income tax twice on interest

Answer 25

disadvantages of loans

Question 26

a loan started at prior carrier and transferred to TRS when plan transferred

Answer 26

take over loan

Question 27

money order, certified check or Bill Pay

Answer 27

methods of payment for loan payoff

Question 28

default in entirety if late by one quarter

Answer 28

payroll deduction loan

Question 29

will default in full the quarter after the quarter it was determined to be in danger of default

Answer 29

coupon loan

Question 30

implications on account of defaulted loan

Answer 30

reduce number of loans ppt can take

if only allowed one loan and they default, cannot take another loan