1. Automated Retirement Plan Loan Insurance Program to Pay Off Loans Upon Employee’s Involuntary Separation of Service
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Thomas A Ference
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Human Resources Mining & Distribution Co
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2. Automated Retirement Plan Loan Cancellation Insurance Program
The majority of Defined Contribution plan sponsors want employees to achieve retirement goals and are increasingly seeking solutions to minimize qualified plan leakage and enhance the employee’s overall financial wellness.
This group-style insurance program underwritten by an A+ rated carrier protects plan participants from loan defaults caused by death, disability or involuntary unemployment
Here, the ERISA Plan Sponsor adopts the insurance program at the plan level for all participants
Plan data is shared between the plan record-keeper and the Insurance Program Administrator (IPA) as to which participants have separated from service
The IPA requests affidavits from both the employee and the employer to certify that a separation was involuntary

3. Automated Retirement Plan Loan Cancellation Insurance Program
Upon validation, the insurer reimburses the plan so as to restore the unpaid loan balance in the participants account
Insurance premiums = $2.47/$1,000 / month on borrowed amounts up to $10,000 and $4.25 /$1,000/ month thereafter
Premiums can be paid either by the participant via payroll deduction (along with principal and interest) or by the qualified plan from a plan level account
Helps Plan Sponsors comply with ERISA requirements to “help preserve plan assets in the event of a loan”
Helps participants conserve retirement assets by paying off loans thereby minimizing the temptation to cash out remaining plan balance (in an estimated 50%+ of loan default cases)

4. Retirement Plan Leakage = $70 Billion
Savings Plans Being Compromised by Leakage
Retirement Plan Leakage = $70 Billion
Leakage is identified as the top priority for the nation’s retirement savings*
40 cents of every dollar contributed by savers under age 55 eventually leaks from the system**
*Leakage Is a Serious Problem for 401(k) Plans, DCIIA, February 08, 2016
**Retirement Plan Leakage—Cause For Concern And Action, AON presentation to ERIC 2013

5. Loan Problem Starts at Separation from Employment
Plans require loans before hardships
Hardship
Job loss leads to loan defaults, taxes and penalties
Loans
Participants with loan defaults more likely to cash out
Cash Outs
Millions of workers die, become disabled or suffer involuntary job loss each year.*
86% of loans default upon job loss.
$6 billion in loans default annually exclusive of cash outs – a major driver of plan leakage.
*Sources: U.S. Census data analysis and “Borrowing From The Future: 401(k) Plan Loans and Loan Defaults, Wharton School, University of Pennsylvania, February 2014

6. Outsourced Insurance Program Administrator - IPA
1. Participant takes a loan
Loan protected by insurance
2. Welcome kit
How program works,
summary of participation
Insurance Program Administrator
6. Loan default &
cash out prevented
Account balance
is restored
3. Protection in place
Staying on track for retirement
5. Covered event occurs
IPA communications
4. IPA call center
Questions and decision support

7. Next Steps
This product/service is contained in the HR Specialty Products & Services Catalogue™
Operational level details about this particular service provider can be obtained in conference with the vendor
The HR Mining &Distribution Co. is an independent and contracted representative of the vendor
Upon your request, we will arrange for an introduction that can range from a simple, quick conference call to a services overview / system demo
Tom Ference (Chicagoland area) or
Thank you for your potential interest in this fresh thinking