How Do I Make My Loan Payments?
Posted on Mar 26, 2014 10:58am PDT
Q. Christie C. of Arkansas asks: "How Do I Make My Loan Payments?"
A. Brett Disdale from Pension Evaluators & QDROS Of Troyan, Inc Associates
Group, answers: "Loan repayments must be deducted directly from payroll, albeit
on an after-tax basis. The payment amount is determined when the loan
is set up, and is documented in the amortization schedule. Once the loan
has been made, you generally can't stop this process.
In most cases, you are able to make additional payments to the loan principal.
There are special procedures for this, so please contact us or your plan
administrator for more information.
Military Service. In the case of military leave, a plan may permit loan
repayments to be suspended for the entire period of the leave with no
maximum time limit. (Typically, the maximum suspension length is only
one year.) The length of the loan may be extended to the maximum permissible
term for the loan (usually five years) plus the period of military leave.
When the participant returns, loan payments must resume. The plan may permit
the participant to resume paying the same dollar amount with a "balloon"
payment of the balance due at the end of the loan term, or increase the
payment amount by re-amortizing the balance due over the remaining loan
term."
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