Employee Benefits Update - April 2009
New Rules Amend Truth in Lending Act to Exclude Plan Loans
On December 18, 2008, the Federal Reserve Board (the "Board") approved final rules amending Regulation Z, which implements the Truth in Lending Act ("TILA"). The Board amended Regulation Z to exempt plan loans taken from employer-sponsored retirement plans qualified under section 401(a) of the Internal Revenue Code (the "Code"), tax-sheltered annuities under section 403(b) of the Code, or government-sponsored deferred compensation arrangements under section 457(b) of the Code, from the TILA requirements. However, the exemption only applies if the loan proceeds are comprised of fully-vested funds from the participant's account and are made in compliance with the Code. The final rules are effective July 1, 2010.