As a Plan Sponsor or Plan Administrator, you are responsible for reviewing and approving participant loan requests, and ensuring vesting data and loan repayment records are accurate. This guide walks you through how to manage these requests, what actions you may need to take, and how to handle loans after employee termination.

Who This Applies To

This information is for 401(k) Plan Sponsors and Plan Administrators responsible for managing employee loan requests, distributions, and RMD approvals within the Ubiquity Retirement + Savings platform.

Loan Request Review Process

Participant loan requests require Plan Administrator review and approval.

What to Expect

  • You’ll receive an email notification when a new request needs your attention. The email includes a link to the review page.
  • Outstanding requests will appear under Action Items on your Employer Dashboard.

How to Review and Approve or Deny

  1. Go to your Employer Dashboard.
  2. Select Loans & Withdrawals from the left navigation menu.
  3. Click on the participant’s name to view request details, including:
  • Current account balance
  • Vested percentages by source
  • Loan details 
  1. Review and, if necessary, update the participant’s vesting percentage in any employer contribution source.
  • Note: Updating vesting here overrides the system's auto-calculated vesting and will require manual maintenance going forward.
  1. Click Approve or Deny to complete the review.
  • If denying a request, we recommend communicating your reasoning directly to the employee.

Maintaining Accurate Vesting Information

Why Accurate Vesting Matters

The amount available to employees for loan is based on their vested balance in the plan. 

  • If your plan uses a vesting schedule that is not immediate, employees will not have full ownership of employer contributions until they have satisfied the service requirements outlined in your plan document.
  • Accurate vesting records ensure participants have access only to their vested balance, protecting both the plan’s compliance and the employee’s long-term benefit.

Important: Employee deferrals (the money employees contribute from their own paychecks) are always 100% vested and immediately available. Only employer contributions may be subject to a vesting schedule.

Example: If your plan requires 3 years of service to be 100% vested, and an employee requests a withdrawal after 2 years, they may only have access to a portion of the employer contributions plus all of their own contributions.

Maintaining correct vesting data is critical when reviewing and approving loan or distribution requests to ensure compliance and prevent errors.

Managing Loan Repayments

As the Plan Administrator, you can view repayment schedules to confirm that they’re set up correctly in your payroll system.

How to Access Loan Details

  1. Go to your Employer Dashboard.
  2. Select 401(k) Plan > Loans & Withdrawals.
  3. Click the employee’s line item to view:
  • Loan balance
  • Repayment schedule
  • Downloadable amortization schedule

Handling Loans After Termination

If an employee with an outstanding loan leaves your company, they have three options within three months of their termination date:

  1. Do Nothing
  • After the grace period, the loan may be marked as defaulted by the Plan Sponsor.
  • The outstanding balance will be reported as a taxable distribution on Form 1099-R.
  1. Pay Off the Loan in Full
  • The employee writes a check to your company for the full balance.
  • You deposit the check and report the amount in the Loan column on the Report Contributions screen.
  1. Pay Off Part of the Balance
  • This option is only available for former employees.
  • The employee writes a partial payment check to your company.
  • You deposit the check and report the payment in the Loan column.
  • The remaining loan balance will be reported as taxable income on Form 1099-R.

Loan Troubleshooting Tips

  • Loan defaults due to inaction may cause unexpected tax consequences for participants. Ensure you or the employee are proactively addressing unpaid open loan balances.
  • Payroll errors or missed repayment schedules can lead to loan defaults. Use the loan amortization schedule to verify accuracy.

Need Help?

If you need assistance, please contact us.