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QOTW: Inflation and Plan Loans

A member mentioned they have seen an increase in participants asking about plan loans lately and wondered if others are and if they are contemplating any changes to loan or hardship provisions. We asked members in this week’s QOTW what they are seeing and also asked if they are providing any specific education around this topic. Nearly 30 percent of respondents (27.8 percent) indicated they have seen an increase in loan requests recently, and though some are providing education on market volatility, most are not. Comments follow.

  • A better answer may be we are not seeing an uptick in loans yet. We are discussing if the current interest rate model we use (Prime plus) should be modified
  • Changed loans to a request of no more than two per year or outstanding.  New SPD will be provided.
  • I don't think this has gone on long enough to cause an increase in hardships. Ask again next year.  I think the loan issue is different. The cost of the loan has gone up with the interest rates. That might slow an increase down. Only time will tell.
  • I'm reluctant to start an education on this as I don't want to inadvertently trigger more UEWs and Loans. Not considering plan design changes around this topic.
  • It will be brought up at the next 401k fiduciary meeting for a design change or education.
  • Looking into some changes but nothing concrete as yet
  • No new education--we already provided general financial management info and financial advice.  No plan design changes contemplated.
  • No plans about education other than normal distribution of Summary Plan Description which explains loans and hardship distributions.
  • No special educational efforts on the topic.
  • No we aren't providing education.  We aren't considering plan changes.  Hopefully this is a good sign that our employees are surviving inflation.
  • Our plans do not offer hardships; we offer one outstanding loan at a time.  Most of our financial wellness education on the plans explains that loans from the 403(b) plan should be a last resort
  • Our recordkeeper has made available webinars and other education materials on market volatility. We are looking to allow participants to self-certify two hardships per calendar year, a change that will begin in 2023.
  • Planning high level education meetings around market volatility and encouraging one-to-pone sessions with an advisor.
  • We are looking at Managed accounts as the default for 50 +
  • We are not considering any plan changes.   If a participant has a question we address the topic at our employee meetings.  If one person has a question it's best to assume that others will have the same/similar question.  We are a small company so it is easy for us to address topics in this way.
  • We are not providing any additional education or considering design changes. Should there be a meaningful increase in loan or hardship requests, this would likely be a topic for discussion.
  • We are working with our Financial Advisor to create short video's.
  • We do a annual seminar on debt as part of our financial wellness program.  We cover 401K loans during that seminar.
  • We do provide ongoing education.
  • We do provide some education around market volatility and the risks of taking a loan.  We're not considering any plan design changes at this time.
  • We have made educational tools available to those you choose to use them.
  • We have modules available regarding loans that are posted regularly for participants to view.  We are not considering any loan design changes.
  • We have not provided any mass education on this topic but we do try to monitor and check in with those requesting hardship withdrawals to ensure they have explored all alternatives.  We removed loan provisions from the plan several years ago, so those aren't options for employees.
  • We have not seen an up-tick in loan requests or hardship withdrawals due to current inflation concerns.
  • We have provided participants with flyers regarding hardships.  Our plan does not allow loans.  We are not going to change our plan design.
  • We have the loans available, but don't encourage them. We would prefer to do employee loans rather than have them take out funds meant for retirement. But we do allow them if that is what the employee wants to do.
  • We send out market volatility articles to participants. We don't offer loans but do offer hardships - recently limited to two per year.
  • We're not providing any education nor or we considering any design changes.  The number of loan requests and hardship withdrawals has actually decreased over the last year.
  • Yes, our financial planners can provide guidance on budgeting.
  • Yes, providing education
  • yes, we are providing education. No plan changes around this topic.
  • Yes, we provide education around this topic. No, we are not considering any plan designed changes around loans/hardships. Most of the time the loans are taken by the same participants. They pay off one loan and take another.
  • Yes.  We are providing education on this topic but are not considering plan changes.
  • Yes.  We use our investment advisor to counsel individuals requesting these as a part of the process.