Reasonable Interest Rate. A Participant must be charged a reasonable rate of interest for any loan he/she receives. For this purpose, the interest rate charged on a Participant loan must be commensurate with the interest rates charged by persons in the business of lending money for loans under similar circumstances. The Plan Administrator will determine a reasonable rate of interest by reviewing the interest rates charged by a sample of third party lenders in the same geographical region as the Employer. The Plan Administrator must periodically review its interest rate assumptions to ensure the interest rate charged on Participant loans is reasonable. A separate written loan policy or written modifications to this loan policy may prescribe an alternative means of establishing a reasonable interest rate.
Appears in 3 contracts
Sources: Defined Contribution Plan and Trust (National Penn Bancshares Inc), Defined Contribution Prototype Plan and Trust Agreement (Mercantile Bancorp, Inc.), Profit Sharing/401(k) Prototype Plan and Trust (Capital Corp of the West)