401(k) Plan Loan Interest Rate Rises

In December, the Federal Reserve raised its benchmark interest rate by .25%, increasing the prime interest rate to 3.50%.  Effective January 1, 2016, the 401(k) Pension Plan’s loan interest rate, which is set at 1% more than the nation’s prime interest rate, is 4.50%.

Things you and your employees should consider about loans
If your cooperative offers a 401(k) Plan loan option, your employees are eligible to take loans. You should encourage them to contact you for details on your co-op’s loan program.

Participants should weigh the pros and cons of taking a loan as well as seek guidance from a financial or tax advisor. They also can contact NRECA’s Personal Investment & Retirement Consulting (PIRC) team at 866.673.2299, option 6, or at pirc@nreca.coop.

Modeling loans online
To view the rate and request a loan, participants can log in to the Employee Benefits website and go to My Retirement > My 401(k) > Loans and click on “Model and Request a Loan.”

For questions, contact the Member Contact Center at 866.673.2299 or contactcenter@nreca.coop.