Reporting Forwarded Loan Repayments

Q. If an employer, through salary reduction, forwards an employee's loan repayments to a 403(b) contract provider, does the employee's contract or account to which the loan repayments are being made need to be included in the plan's annual report?

 

A. Yes. Even if the loan repayments technically are not "employee contributions," the Department of Labor, for purposes of Field Assistance Bulletin (FAB) 2009-02, would treat ongoing loan repayments forwarded by the employer like salary reduction employee contributions, giving the employer an ongoing role with the contract and provider beyond that envisioned in the FAB. On the other hand, the annual reporting relief in FAB 2009-02 could apply to contracts or accounts that otherwise meet the conditions of the FAB for which employees make loan repayments in 2009 directly to the contract or custodial account providers.