Taking a participant loan from a retirement plan is such a bad investment choice that it should not be allowed in any retirement plan other than for hardship reasons. Consider that:
It is clear that participant loans can drastically reduce an employee's chances of achieving retirement readiness. As a result, plan sponsors should seriously consider limiting loan availability to hardship criteria or eliminating loans entirely from their plans. Contributing Editor Robert C. Lawton is President of Lawton Retirement Plan Consultants, LLC a Registered Investment Advisory firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. Mr. Lawton has over 25 years of experience working with corporations on their retirement plans and is a Chartered Retirement Plan Specialist (CRPS) and Accredited Investment Fiduciary (AIF). Mr. Lawton may be contacted at firstname.lastname@example.org 414.828.4015.
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