The Contractors Plan Loan Program is a one-of-a-kind solution that takes the hassle out of loans by taking the employer out of the loop. Typically, if employees want to take out a loan against their retirement plan, the employer becomes a mini loan department. The employer must set up the loan administration process, collect repayments from the employee's paycheck and flow payments back to the vendor. If the employee is terminated, the loan is due in full, and if it can't be paid, the employee defaults on the loan and incurs fines from the IRS.
Instead, we've developed The Contractors Plan Loan Program sets up retirement loans directly between the benefits plan and the employee. Employees get a statement each month, and employers don't have to handle situations where employees get behind on payments. Perhaps most importantly, the employee can leave the employer and the loan doesn't automatically become due in full in that the employee can continue to make payments to The Contractors Plan. Because contractors tend to have higher turnover than most companies, this is a big benefit to employers and employees.
Employees enjoy having short-term access to their fringe benefit dollars while still accruing a balance and interest for future retirement. Employees can choose to receive a single lump payment or a even choose a loan line of credit that has a debit card that can be used for day-to-day expenses.