How are loans repaid?
Loans are repaid by entering into an Automated Clearing House (ACH) debit agreement with your personal bank. You investment provider will assist you with setting this up. 5. What happens if a plan loan is not repaid according to its terms? The loan might be considered in default for non-payment, participant misrepresentation or a change in financial status such as bankruptcy. A default will be considered a “deemed distribution” which is a taxable event. Until the final disposition of the loan, you remain obligated for any unpaid principal and accrued interest. Consult the plan document or a tax advisor for specific information about your circumstances.
