403(b) Loan Program Information
Fidelity Investments Tax-Exempt Services Company (FITSCO) will assume master record keeping of the University's defined-contribution plans effective July 1, 2005. The conversion of these plans from the current monthly valuation to FITSCO's daily valuation platform will occur over a six to eight week period.
Key Dates and Details
- As of June 23, 2005, the University Loan Office will cease funding loans initiated in May 2005.
- Beginning mid-July 2005, all future loans will be processed by FITSCO rather than the University. Loan requests will not be processed from June 1, 2005, to approximately mid-July 2005.
- Processing loans by FITSCO will be much faster. For example, a loan approved on July 18, 2005, should be funded by July 22, 2005.
- Interest rates for all loans, general-purpose/short-term loans and primary- residence/long-term loans initiated by FITSCO will be the bank prime rate plus 1% as published in the Wall Street Journal on the first business day of each month. For example, the current prime rate is 5.75%, which means the plan loan rate, if effective today, would be 6.75%.
- Beginning July 2005, a participant with account balances at Fidelity and/or Calvert will no longer have to transfer those balances to University Funds in order to take a plan loan against those funds.
Interest Rate Information
The underlying component of the interest rates is the average of the annualized rates of return of the University STIP fund for the past four quarters. A complete rate history can be found on the Office of Loan Programs link on the right. Recent plan-loan rate information is available on the Current Loan Rates link on the right. And general plan-loan information is available on the Tax-Deferred 403(b) Plan link on the right.
Loans will be processed by FITSCO starting mid-July 2005. At that time, the new rates will apply (prime plus 1%) for all future loans. Approved loans through FITSCO generally will be funded within a week of application. Effective July 2005, there will be other new features concerning plan loans. These new features will be discussed in greater detail through future communications.
A FITSCo slide show containing valuable information about the transition is available on the right. If you have employees who have been unable to attend a FITSCo transition meeting, this presentation is an excellent resource for them to view.
If you have questions, please contact the CHR Benefits Office at (310) 794-0830 or Healthcare Human Resources at (310) 794-0500.
Campus Human Resources, Benefits Services
Phone: (310) 794-0830 | Fax: (310) 794-0835