Enrolling in the Plan
Investment Options
Participant Statements
Re-hired Employees
PlanWeb and the VRS
Distributions for Terminated Employees
Employee Transfers
Voluntary Withdrawals and In-service Withdrawals
Hardship Withdrawals
Plan Loans
Required Minimum Distributions
Rollovers
Direct Voluntary Contributions
Contribution Nondiscrimination Test Refund Checks
Military Reservists Called to Active Duty and USERRA
About Enrolling in the Plan
Why should I participate in my employer sponsored NADART plan?
Participation in your employer’s NADART plan allows you to save for retirement while lowering your current taxable income. As a participant, you may receive additional contributions from your employer, which will increase your retirement savings. Please refer to the plan provisions insert in your Summary Plan Description to see if employer contributions are included in your plan. If you need help finding a copy of your plan provisions insert, see the plan coordinator at your company or contact the NADART Plan Information Center at nadart@nada.org.
When can I begin participating in the plan?
You can begin participating once you have satisfied the age and service requirements for plan participation. Please refer to the plan provisions insert in your Summary Plan Description to review the age and service requirements for your plan. If you need help finding a copy of your plan provisions insert, see the plan coordinator at your company or contact the NADART Plan Information Center at nadart@nada.org.
How do I begin participating in the plan?
You can begin making contributions to the plan by completing a Payroll Deduction Authorization Card (located in the forms section of this site) indicating what percentage of pay or specific dollar amount you would like withheld from your paycheck. Depending on your plan type, you may contribute on either a before-tax or if your employer has elected, an after-tax basis.
What are deferred cash contributions? (for 401(k) plans)
One of the benefits of a 401(k) plan is the ability for you to designate a portion of your pay to be contributed to your retirement account before it is taxed. These pre-tax contributions are referred to as deferred cash contributions. The contribution amount will not be taxed until it is withdrawn from the account.
What are after-tax voluntary contributions?
After-tax voluntary contributions are those contributions submitted voluntarily by you on an after-tax basis. If your plan offers this option, you can make voluntary contributions through payroll deduction or by submitting a personal check to NADART. Although these contributions are made on an after-tax basis, the income earned is tax deferred until withdrawal.
What does vesting mean?
When you receive an employer contribution, it is included in your account balance even though you may not immediately own 100% of the contribution. A vesting schedule is used to determine your ownership of employer contributions. Please refer to the plan provisions insert in your Summary Plan Description to see the vesting schedule for your plan. If you need help finding a copy of your plan provisions insert, see the plan coordinator at your company or contact the NADART Plan Information Center at nadart@nada.org.
About Investment Options
What are my options for investing my money?
In the Classic plan, employer contributions and employee pre-tax contributions are directed to the NADART Fund (pdf). After-tax contributions are put into the Income Fund (pdf).
In the Investment Choice plan, participants may choose from a variety of investment options, including balanced funds, income funds, international funds, large cap funds, mid cap funds, small cap stock funds and target dated funds. Review your investment choices (PDF of Section 2 of the enrollment booklet) to learn about your available options. Your contributions may be invested among the available options in increments of 1% adding up to 100%. Note: The other sections of the enrollment booklet are available for review on the Participant Information page of this site.
How will my contributions be invested if I do not act to direct my own investments? (for Investment Choice participants)
If you do not make investment elections before your first contribution or the effective date of your Investment Choice 401(k) Plan, your future employee contributions and employer contributions will be plan-directed into the NADART Fund (pdf) and your future employee after-tax voluntary contributions will be plan-directed into the Income Fund (PDF).
How do I make my investment elections? (for Investment Choice participants)
Internet-based PlanWeb and an automated Voice Response System (VRS) with the toll free number (877) 487-4015 provide you with the ability to review and modify your investment elections 7 days a week, 24 hours a day. You will be able to access PlanWeb and the VRS using both your social security number and a personal identification number (PIN). Before accessing the VRS, you should complete an Investment Election Worksheet (pdf) to guide you through your options.
How will rollovers and direct voluntary contributions be invested?
For Classic plan participants, rollovers are invested in the NADART Fund (pdf) and direct voluntary contributions are invested in the Income Fund (pdf).
For Investment Choice participants, rollovers into the plan and direct voluntary contributions will be invested according to your current investment elections. Rollover contributions will be invested according to the current investment elections for the employee contribution source, and direct voluntary contributions will be invested according to the current investment election in the employee after-tax voluntary source.
If you choose to invest your rollover or direct voluntary contributions differently than your current investment elections, you should either call the VRS or use PlanWeb to change your future investment elections before submitting the contribution. You may also contact the NADART Plan Information Center at nadart@nada.org or call (800) 462-3278 for additional instructions.
If you have not designated any investment elections, these contributions will be invested in the plan-directed investments in place at that time your rollover will be plan-directed into the NADART Fund (pdf) and your direct voluntary contributions will be plan-directed into the Income Fund (pdf). The participant may move the funds from the plan-directed investment after they have been invested by initiating a transfer through the VRS or PlanWeb.
How are loan repayments invested? (for Investment Choice participants)
Loan repayments are invested according to your current investment elections. Loan repayments are returned to the source from which they were distributed. For example, assume you request a loan of $1,000--$500 is borrowed from your employer contribution monies and $500 from your employee contributions. If you are investing all of your current employer contributions in Fund A and all of your current employee contributions in Fund B, 50% of the loan repayment will be invested in Fund A (employer contribution source) and 50% will be invested in Fund B (employee contribution source). If you have no investment elections, the total loan repayment will be plan-directed into the NADART Fund (PDF) with 50% going into the employer contribution source and 50% into the employee contribution source.
How should I invest my money?
Neither the plan coordinator nor NADART staff members can offer investment advice to participants. However, NADART provides educational materials designed to help you determine your investment strategy in the participant information section of this site.
If you are unsure what your current investment elections are, you can verify them by calling the Voice Response System at (877) 487-4015 or on PlanWeb.
Do all of my contributions have to be invested in the same way? (for Investment Choice participants)
No. You may choose different investments for your employee contributions, your employer contributions, and your employee after-tax voluntary contributions.
How often can I make changes to my investments? (for Investment Choice participants)
You can make investment changes on a daily basis.
Will additional investment options be offered in the future? (for Investment Choice participants)
NADART regularly reviews the performance of the available investment options and may add or replace funds in the future at the discretion of the NADART Board of Directors.
Are asset management fees charged to my account?
As with any investment, the managers for the various investment choices available in your plan charge fees for managing these funds. The fees are deducted from a fund’s unit price before the fund’s performance figure is calculated. The performance figures you see on your employee statement are the returns after the asset management fees have been deducted. These fees are used for expenses that may include portfolio managers, securities traders, research analysts, auditing costs and the publishing of prospectuses. Investment Choice participants may review their investment choices (pdf of Section 2 of the NADART Enrollment Booklet) to learn about fees and expenses. The other sections of the Investment Choice plan enrollment booklet, as well as the Classic plan enrollment booklets are available for review on the Participant Information page of this site.
Is the price I receive on my investment before or after a basis charge?
All returns are reflected after the deduction of basis charges, also referred to as asset charges or annual fund operating costs.
About Participant Statements
When can I expect to receive my participant statement?
You can expect to receive your NADART Participant Statement during the first month of each calendar quarter. Statements are mailed to your home address as soon as administratively possible following the close of each quarter.
Can I request copies of old employee statements?
Yes, but please be aware that a nominal fee is charged to the plan sponsor for this service, so the request should be made by your dealership’s plan coordinator.
The amount in the column labeled Investment Earnings is in parentheses… Does this mean my account lost money?
If your account lost money, the loss will appear within parentheses ( ). If the numbers in this column are not in parentheses, your account has earned income.
I show a negative amount in the column labeled Contributions. Why?
Usually this situation occurs when a highly compensated employee (like an owner) has received a large contribution refund as the result of the Contribution Nondiscrimination Test or the Annual Additions Test. If a refund of this nature is higher than the amount of contributions currently received, a negative amount will be recorded in the column labeled Contributions. If you are unsure about the cause of this situation, please send an e-mail to nadart@nada.org or call our Plan Information Center at (800) 462-3278.
About Re-hired Employees
Am I eligible to participate in the plan upon re-hire with my previous employer?
If you previously satisfied the eligibility requirements of the plan before termination and had earned vesting credit, you will be eligible for immediate participation. If you had not earned any vesting credit and incurred a break in service greater than five years, you will be considered a new employee. If the break in service was less than five years, you can participate immediately.
About PlanWeb and the Voice Response System (VRS)
What is a Personal Identification Number (PIN)?
Once you are enrolled in the plan, NADART will assign you a personal identification number (PIN). A letter will be mailed to your home address informing you of your assigned PIN so that you can access PlanWeb or the VRS. You can keep the PIN assigned to you by NADART or you can personalize it through PlanWeb or the VRS.
How can I be sure that my PlanWeb or Voice Response System (VRS) investment elections are processed correctly?
Confirmation of any processed transactions will be sent to your home address, as most recently provided by your employer. You are responsible for monitoring the transaction activity that is requested using PlanWeb or the VRS. If you receive a written confirmation that is inconsistent with your instructions, or if you fail to receive a written confirmation after requesting a transaction via internet or telephone, you should contact NADART for clarification.
Since confirmations of processed transactions are sent to my home address, should I notify NADART if my address changes?
No. We receive updates to participant information, including address changes, through your employer’s payroll files, which are regularly submitted to NADART. You should notify your employer’s payroll department of any change to your address.
Is there a deadline for trades?
Yes. Funds traded via PlanWeb or the VRS must be completed before 4:00 p.m. EST (3:00 CST) in order for them to be processed at the closing price for that business day. Trades made after that deadline will be processed at the next business day's closing price. Please note that trades and prices can also be affected by early closings of the stock market.
About Distributions for Terminated Employees
When will I receive my distribution check?
Checks are normally processed Monday-Thursday. Properly completed benefit forms are entered on the first possible date after receipt and mailed to the plan sponsor by the end of the next business day. If you would like to check the status of a specific request, please complete our Status of My Distribution Request Form.
Where are participant distribution checks mailed?
Participant distribution checks are mailed to the plan sponsor for review of the check amount and calculation sheet. It is the responsibility of the plan sponsor to distribute the checks to the appropriate participant. However, the plan sponsor may provide a signed request for a particular check to be mailed to a different address. The request must include the Plan ID number, social security number of the participant, address the check should be mailed to and an authorized signature from the plan sponsor.
When will I receive my tax information (Form 1099-R)?
A Form 1099-R is attached to all distribution checks, except checks issued from installment or deferred accounts. A Form 1099-R is sent to the home address of installment or deferred participants before January 31.
What happens to my account balance if I die without naming a beneficiary?
As stated in section 9.12 of the NADART Master Plan Document, the account balance would be distributed to survivors in the following sequence: 1) spouse 2) children 3) other descendants 4) parents 5) other ancestors 6) brothers/sisters 7) nephews/nieces 8) estate.
My physician signed the Statement of Disability. My employer doesn’t agree with the statement. Who makes the final decision?
If the employer (as plan sponsor) does not agree with the Statement of Disability, no disability benefit will be paid unless the Social Security Administration provides you with a Certification of Disability.
About Employee Transfers
I worked for Company "A" in our control group, quit and have now been hired by Company "B" in the group. Can I transfer my account and continue participation in the plan without satisfying another waiting period?
Yes, because this is a transfer between commonly controlled groups, your account will be transferred and your participation can continue without interruption. You will need to complete and submit a NADART Benefit Request Form (N-10) (pdf) requesting a commonly controlled transfer.
If I transfer to a non-commonly controlled dealership, can I continue participating in the plan without satisfying another waiting period?
Although you can transfer your account balance and continue to tax-shelter your contributions and earnings, if your new employer has a waiting period for participation in the NADART plan, you will need to satisfy it before making additional contributions to the plan. Service with an unrelated employer does not count towards satisfying eligibility requirements or towards vesting of employer contributions.
When transferring employment, can I transfer my account if the old employer had a Classic pension plan and the new employer has an Investment Choice 401(k) plan?
Yes, the money will be transferred into the new account.
About Voluntary Withdrawals and In-Service Withdrawals
What is the difference between an in-service withdrawal and voluntary withdrawal?
An in-service withdrawal requires a participant to be at least age 59 ½ in order to take a distribution from the fully vested portion of the plan assets. A voluntary withdrawal does not have an age restriction, but must include only voluntary after-tax contributions and related income.
How is the taxable portion of a voluntary withdrawal calculated?
The taxable portion is pro-rated based on the total amount in the voluntary account vs. the total taxable amount in the voluntary account.
If I want to withdraw a small amount, such as $500, from my account, is spousal consent needed?
If your vested account balance is over $5,000, then you would need spousal consent for any amount that you plan to take from the account. If the vested balance is less than $5,000, you would not need spousal consent to take a distribution from the account.
When will I receive tax information (Form 1099-R) for this type of withdrawal?
A Form 1099-R will be attached to your distribution check.
About Hardship Withdrawals
What is a hardship withdrawal?
Participants can withdraw their deferred contributions if they meet one of the following hardship criteria:
- are purchasing a primary residence (excluding mortgage payments)
- incur post-secondary tuition expenses for the next semester for themselves or dependents
- have extraordinary uninsured medical expenses for themselves or dependents
- has expenses for the repair of damage to the participant`s principal residence that would qualify for the casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).Code Section 165 specifies that damages must arise from fire, storm, shipwreck, other casualty or damage from theft
or
- face a foreclosure on the mortgage of their primary residence or eviction from their residence.
- has necessary and reasonable expenses related to the funeral or burial of the participant's parents, spouse, children or dependants.
The brochure Determining Eligibility for a 401(k) Hardship Withdrawal (pdf) provides additional details about this type of distribution.
When will I receive my distribution check?
Hardship distribution checks are normally issued within days of receipt of a properly completed Hardship Distribution Request Form (pdf). If you would like to check the status of a specific request, please complete our Status of My Distribution Request Form.
Where are hardship distribution checks mailed?
Hardship distribution checks are mailed to the plan sponsor for review of the check amount and calculation sheet. It is the responsibility of the plan sponsor to distribute the checks to the appropriate participant. However, the plan sponsor may provide a signed request for a particular check to be mailed to a different address. The request must include the Plan ID number, social security number of the participant, address the check should be mailed to and an authorized signature from the plan sponsor.
When will I receive my tax information (Form 1099-R)?
A Form 1099-R is attached to all hardship distribution checks.
About Participant Loans (for Investment Choice participants only)
Am I allowed to take a loan from my account?
If your employer’s plan provides for loans, you can request a minimum loan amount of $1,000 for any purpose. The maximum loan amount is the lesser of 50% of your vested account balance (including the outstanding balance of your other loans under the plan) or $50,000 reduced by your highest outstanding loan balance during the last twelve months. NADART will determine your eligibility to receive a loan based on certain restrictions. You may have no more than two outstanding loans at any time.
You can look at different loan scenarios on PlanWeb through the loan modeling option.
Do I have to “qualify” for a loan and/or provide documentation that proves I need the money?
No. You do not need to qualify for a loan. Unlike a hardship withdrawal, you may take a loan for any reason and do not need to show documentation of need.
Are there any restrictions on the timing of the repayment of the loan?
You may choose to repay the loan over 1 year, 2 years, 3 years, 4 years, or 59 months. However, the repayment frequency must equal your payroll frequency. You may repay the loan in full without penalty at any time before the end of the loan term.
How is the loan interest rate determined? How often does it change?
The loan interest rate is determined by the prime rate plus 1%. It is updated quarterly. However, once a loan is processed, the rate is set for the term of the loan.
Does the loan interest rate fluctuate during the term of the loan?
No. Your loan interest rate will be maintained at the stated rate at the time the loan is taken.
Will I be eligible to receive the same loan interest rate that I received on my first loan when requesting a second loan?
No. When a second loan is requested it will be subjected to the interest rate at the time of that loan’s distribution.
Can I refinance a loan that is outstanding?
No. You cannot refinance a loan.
What happens if I quit my job while I have an outstanding loan balance?
A participant with an outstanding loan balance who terminates employment has two options:
He/she can pay the outstanding principal and interest back in a lump sum before requesting a lump sum payment This action allows the participant to avoid paying taxes on the outstanding balance.
He/she can “cancel” the loan. This means their account will be offset by the outstanding loan amount when a distribution from the account is processed.
For example, Participant A has a vested account balance of $20,000 including an outstanding loan balance of $5,000. Participant A terminates and requests a lump sum distribution without paying back the $5,000. NADART will deduct the $5,000 leaving the vested balance at $15,000. NADART will then withhold 20% of the $20,000 for federal income taxes. Participant A’s check amount would be $11,000.
About Required Minimum Distributions
When is a minimum distribution required?
When a participant is a 5-Percent Owner of the dealership (owns more than 5%) and reaches age 70 ½ in the current year, and is still working, he/she is required by federal regulations to begin receiving annual minimum distributions by December 31 of that year. He/she may delay the minimum distribution until April 1st of the next year, but each subsequent distribution must be made by December 31. A minimum distribution is also required for all employees age 70 ½ who have separated from service with the employer.
Review the NADART brochure, Required Minimum Distributions from Your NADART Account (pdf), for more detailed information.
When will I receive tax information (Form 1099-R) for my required minimum distribution?
A Form 1099-R will be attached to all distribution checks, unless the distribution is issued from an Installment or Deferred account. In that case a 1099-R will be issued prior to January 31 and sent to your home address.
About Rollovers
What do I need to complete a rollover to NADART from my plan with my previous employer?
Detailed instructions are provided in the Rollover section of this Web site.
Can I roll over money from my personal IRA into the NADART plan?
Yes. An eligible rollover distribution from an Individual Retirement Account (IRA) may be rolled over into your NADART plan. The amount that can be rolled into the qualified plan is generally the amount of the distribution from an IRA that is includible in gross income. Distributions from an IRA of after-tax contributions cannot be rolled over to your employer`s plan. Consult your personal tax advisor before electing to roll over your IRA to your employer`s plan.
I forgot to send my rollover money to NADART. I cashed the check about three months ago. Will NADART still accept my rollover?
NADART cannot accept a rollover that has exceeded the 60-day period. Any check received that has exceeded the time limit will be returned immediately. Refer to Rollovers for additional information.
I am leaving my job and would like to roll over my NADART plan balance to an IRA or my new employer’s plan. What do I need to do this?
Refer to rollover to an IRA or rollover to a new employer’s plan for instructions and required forms.
Can I roll over contributions from my spouse`s qualified retirement plan into my NADART plan?
A living spouse`s distribution cannot be rolled over into the NADART plan. However, eligible rollover distributions for a spousal beneficiary may be rolled over to the beneficiary`s NADART plan if the spouse is deceased.
Once a rollover to NADART is complete, can I withdraw the funds?
Rollover contributions accepted by NADART are subject to the distribution rules of the new plan. The contribution can be withdrawn upon termination of employment, at age 59 1/2 or in the event of death or disability.
About Direct Voluntary Contributions
What are direct voluntary contributions, and where will they appear on participant statements?
Direct voluntary contributions are after-tax dollars submitted directly to NADART and are additional to any contributions made to NADART via payroll deduction. Direct voluntary contributions are reported as voluntary contributions on quarterly participant statements and are not segregated from voluntary contributions made via payroll deduction.
How do I arrange to submit a direct voluntary contribution?
Use the Direct Voluntary Limit calculator on the Web site to calculate your direct voluntary contribution limit. Print out the associated page that includes the calculations. Include this page, along with your Plan ID and Social Security Number with your check for any amount up to the maximum and submit to NADART.
I would like to submit additional pre-tax contributions. Can I send you a check for additional dollars to be applied as optional deferrals?
No, deferrals can only be made through payroll deduction.
NADART authorized me to contribute $8,700 as a direct voluntary contribution. I only want to send in $4,500. Is this acceptable?
Yes, you may submit any amount up to the maximum authorized by NADART.
About Contribution Nondiscrimination Test Refund Checks
I received a contribution nondiscrimination test refund check. Why?
The retirement plan sponsored by your employer must be tested annually for compliance with Internal Revenue Service contribution nondiscrimination requirements. Regulations require a comparison of the average contribution percentage (ACP) of those employees classified as highly compensated and the rest of the employees. If the difference between the ACP for the two groups is not within prescribed limits, corrective action must be taken. Refunding contributions and related income to some or all highly compensated employees (HCEs) will bring the plan into compliance with these requirements. This process is repeated for the average deferral percentage (ADP).
Who should be considered a highly compensated employee?
Participants who earned in excess of $100,000 in compensation during the prior year should be classified as highly compensated employees for 2007 testing. Participants who own (directly or indirectly) more than five percent of the employer should also be classified as highly compensated employees, regardless of the amount of compensation earned in the prior year. The ownership interest of an individual must be considered as owned by the individual’s spouse, children, parents and grandparents. If you were classified as a highly compensated employee and feel this is an error, please contact the plan coordinator at your dealership immediately.
I don’t want a refund check. May I return it to NADART?
No. Federal regulations will not allow NADART to accept the return of a check issued to comply with contribution nondiscrimination requirements.
Is a contribution nondiscrimination refund eligible for rollover to my IRA?
No. A corrective distribution issued to comply with contribution nondiscrimination requirements is not eligible for rollover to an Individual Retirement Account (IRA) or another qualified plan.
Not all of the highly compensated employees at my company got a refund. How do you decide who has to receive money back?
Federal regulations provide a mathematical formula to determine the amount of contributions that must be refunded to the highly compensated group. After NADART has calculated the dollar amount that must be refunded, the refunds are issued to the highly compensated employees who contributed the largest dollar amounts.
About Military Reservists Called to Active Duty and USERRA
What is the Uniformed Services Employment and Reemployment Rights Act (USERRA)?
USERRA is the Act that protects the rights of employees who enter military service from a civilian job. Specifically, it provides direction to employers regarding returning employees’ rights to reemployment, certain retirement benefits and other benefits that would have accrued during their military service absence. USERRA protects the rights of individuals during a period of military service with respect to any retirement benefits or rights they would have accrued had they been employed continuously by the civilian employer.
What military service is subject to the provisions of USERRA?
USERRA applies to persons who perform voluntary or involuntary military duty. This duty may be performed in active or reserve components of the Army, Navy, Marine Corps, Air Force, Coast Guard, Army National Guard, Air National Guard or Public Health Service commissioned corps.
What does military service include?
Military service includes active duty (for training or otherwise), inactive duty training, full-time National Guard duty and absence from employment for an examination to determine fitness for military service.
Are small employers exempt from the provisions of USERRA?
No. USERRA applies to virtually all U.S. employers regardless of size.
How much military leave must an employer permit?
There is a five-year cumulative military service limit on the amount of voluntary military leave an employee can use and still keep reemployment rights. There are, however, a number of exceptions to the five-year limit, including: service mandated during a period of war or national security, federal service by National Guard members to handle certain situations and service required to complete an initial period of obligation.
When must an employee return to employment after being released from military duty in order to qualify for the benefits under USERRA?
If the period of military service is:
- Less than 31 days: Employees should return to work the first day following completion of military service.
- 31 days to 180 days: Employees must submit application for reemployment within 14 days of completion of military service.
- More than 180 days: Employees must submit application for reemployment within 90 days of completion of military service.
- If an employee is hurt or becomes disabled during military duty, employment reinstatement may be extended for up to two years for persons who are unable to work or unable to work at the same level due to disability incurred or aggravated during military service.
Does the period of military service count for benefit accrual and vesting purposes upon a participant’s reemployment?
Yes. The period of military service counts toward the determination of benefit accrual and vesting under the provisions of the plan. A retirement plan may not treat a reemployed person as having incurred a break-in-service for a period of military service.
With respect to a 401(k) plan, may a reemployed participant make up pre-tax and/or after-tax contributions for the period of service during which he or she served in the military?
Yes. A participant has the right to make up any missed contributions that he or she would have had the opportunity to make if civilian employment had not been interrupted by the period of military service.
How much time does an employee have to contribute make-up contributions to an employer’s 401(k) plan?
An employee has three times the duration of military service (up to five years) to make up contributions after reemployment.
If an employee contributes make-up contributions, must the employer match these contributions?
The employer must match these contributions at the same rate the employer would have matched the contributions had the employee made the contributions during the period of military service.
Will the employer credit lost earnings to the account of a participant who contributes a make-up contribution?
No. An employer may not credit earnings with respect to make-up contributions.
Must an employer contribute fixed and/or discretionary contributions to the accounts of employees during their periods of military service?
No, but the employer must make those contributions when the employee returns to employees at the same rate that would have been provided during the period of military service.
Does an employer need to credit forfeitures that would have been contributed to an employee’s account during a period of military service?
No. Employee’s serving in the military do not share in forfeitures during the period of military service.
What compensation is used to determine the amount of any make-up contributions?
Generally, an employer must treat an employee as continuing to receive the same compensation as he or she would have received without regard to the military service. If this method is not reasonable, an employer may use the employee’s average compensation from the last 12-month period (or, if the period of service was less than 12 months, the average of the entire period of employment).
May the repayment of a participant loan be suspended during an employee’s period of military service without fear of violating rules regarding plan qualification, including the five-year loan repayment rule?
Yes, but loan repayments must recommence after completion of military service.
Will interest accrue on a participant loan during an employee’s period of military service?
Yes.
Does the Soldiers and Sailors Civil Relief Act require that the interest rate on a participant loan from a 401(k) plan be reduced to no more than 6 percent?
Yes. The Soldiers and Sailors Civil Relief Act requires creditors, including 401(k) plans, to drop interest rates to no more than 6 percent on debt owed by those entering military service for the period of such military service.
Where can I get additional information about USERRA?
The U.S. Department of Labor Web site includes both A Non-Technical Resource Guide to USERRA (pdf) and frequently asked questions for reservists being called to active duty. You may also want to review our suggestions for military reservists.
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