The Contractors Plan Recordkeeper FAQ
Q: Do participants borrow more with ACA?
A: No, quite the opposite. Our experience shows that participants borrow approximately 30% less when they use an ACA revolving loan line as compared to lump sum loan programs.
Q: Can plan sponsors limit the ACA revolving loan line amounts?
A: Yes. Plan sponsors may set whatever loan line maximum they choose, provided it complies with relevant law (IRC 72(p)) and is applied in a non-discriminatory fashion.
Q: How does ACA help prevent loan defaults?
A. Approximately $50 billion* is unnecessarily lost from retirement plans annually by participants who terminate employment and cannot afford to pay off their outstanding loans when called due, usually within 60 to 90 days. First, ACA proactively communicates to participants the need to make timely loan payments to avoid default and the associated taxes and penalties. Additionally, by utilizing ACA direct invoicing, plan sponsors may allow repayment after termination for up to a 60-month period. This prevents plan leakage, complements the plan sponsor's outplacement services and allows participants to avoid taxes and penalties because of a forced distribution.
Q: How are providers notified that participant repayments are made in a timely manner?
A: Leveraging the integration between ACA and industry leading recordkeeping systems, all the loan balance and payment information is still available to you via your recordkeeping system even though you're no longer processing the loans. Also, ACA's thorough payment collection process includes flexible reporting capabilities to plan sponsors, including duplication of delinquent payment reminders via hardcopy or file.