No Second Loans Where Default in Prior Loan
In order to comply with IRS regulations, the Annuity Fund has been amended to provide for no second loans where you previously defaulted in the payment of a prior loan on and after October 1, 2005. This means that if you previously defaulted at any time, even before October 1, 2005, you cannot secure a second loan. This new rule will be implemented and effective October 1, 2005.
Between now and October 1, 2005, loans will be processed in accordance with the Fund’s current procedure and prior notice to you a follows:
(Current Procedure to 9/30/05)
Effective 1/1/04, the Internal Revenue Service requires that in the event you defaulted in payment of a loan in the future or have defaulted in payment of a loan in the past, you must provide the Fund office with “adequate security” to secure a second loan. The “adequate security” cannot be the remaining balance in your account. Whether the security you offer is adequate will be determined on a case by case basis by your Fund office.
Under existing rules, no second loan can be taken for five (5) calendar years following the year of default in payment of your first loan. For other existing requirements for loans, please see your Annuity Plan and Summary Plan Description or call the Fund office.