401K The following information is out of the 401k Summary Plan Description booklet and information supplied by the Company. In the Event of Leave of Absence (Disability, FMLA) or Layoff. If you are absent from work due to an unpaid leave of absence or layoff, your loan payments will be suspended for the period of the leave, up to a maximum of 12 months. Upon your return, the outstanding loan balance will be re-amortized, and the term of the loan will be extended by the period of the leave, to the extent that the loan will not exceed 5 years from the original loan date. Q. Why did I receive a loan delinquency notice? A. You are at least two payments behind on your loan repayment schedule. Loan regulations require that you stay current with the repayment of your loan. Therefore, you have received a notice letting you know what you owe to bring your loan current. To avoid the potential taxation of your loan, it’s important that you make the missed repayments to the loan. Q. The notice states that the loan may be taxed if I don’t make up the missed payments. Under what circumstance will my loan be taxed? A. If you don’t make the requested repayment for the missed amount and you fall a full quarter plus one payment behind in your loan repayments, loan regulations dictate that your loan must be defaulted and subsequently taxed. If your loan is defaulted and your loan is taxed, you will receive a Confirmation of Loan Taxation Notice with the specifics of your situation. Q. What does it mean if my loan is taxed? A. It means that the loan will be treated as a deemed distribution from the plan. The amount of the deemed distribution will equal your outstanding principle balance and any applicable interest. Furthermore, for those employees under age 59 ½ the deemed distribution will be subject to an IRS 10% penalty tax on early distributions. Q. What can I do to make my loan current? A. To ensure the loan is not defaulted, the participant should send in repayments for the requested missed payments. If it gets to the point you are taxed on your loan it will be considered income and you will have to claim it on your taxes in the year it happens. Even after that happens, the loan is still considered outstanding and must be paid back. While that is happening it’s also accruing interest. If you have two delinquent loans, you cannot get another loan until both are paid up. The moral of the story is, don’t be delinquent. If an active participant has a loan that defaults due to a delinquency, the outstanding loan balance shows against his account until he either pays off the taxed loan amount or terminates and takes a distribution. While he's active, he can repay the taxed loan just like he would an early loan payoff. Please remember to keep current in your loan repayments. If you have any additional questions, they can contact the Your Benefits Resources Center by calling 1-800-568-4015 between 8 a.m. and 8 p.m. Eastern time, Monday through Friday.