The IRS issued final regulations under Code Section 403(b) that became effective January 1, 2009. To comply with the final regulations, the University made some changes to the loan provisions under the University of Illinois Supplemental 403(b) Retirement Plan.
Loan Changes Effective January 1, 2009
· Effective on and after 1/1/09, loans will no longer be available through TIAACREF and are available only through Fidelity.
· Participants with outstanding loans from TIAACREF will continue making payments to TIAACREF using the current payment method and schedule until the loan is repaid.
· If all of a participants investments are with TIAACREF, the participant can request a contract exchange to move funds to Fidelity to request a loan. An exchange is initiated by calling Fidelity to establish an account and then calling TIAACREF to request an exchange. A contract exchange is not necessary unless a loan is initiated.
· Beginning 1/1/09, participants will only be allowed one outstanding loan at a time. If a participant currently has an outstanding loan at TIAACREF, he or she will not be able to obtain another loan from the 403(b) plan until the loan is repaid. If a loan is in default, no new loan will be available to that participant until the defaulted loan is repaid.
· Loans are subject to a setup fee of $50 per loan as well as an ongoing maintenance fee of $25 per year ($6.25 per quarter). (Does not apply to outstanding loans with TIAACREF.)
· Loans issued on or after 1/1/09 are repaid to Fidelity via an automated withdrawal from the participants bank account (ACH bank deductions). The final loan payment to Fidelity may be made by a lump sum check.
Employees can learn more about loan processing by viewing https://nessie.uihr.uillinois.edu/pdf/benefits/loanprocessflow01012009.pdf.
