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ICMA RETIREMENT CORPORATION V. Length of loan In determining the maximum repayment period for residential loans, you should be mindful that the loan term may extend beyond the period the 457 participant is employed by you. If you allow employees to continue to pay their loans after they separate from service (see Section X, Acceleration below), repayments could continue to be made by the participant, through you, for the entire term of the loan (e.g. 30 years). Every payroll period, the partici- pant (former employee) will be required to give you a check for the periodic loan repayment amount. You then include this amount with your next contribution submittal to RC. Loan I repayments may not be made directly to RC by the participant. Instructions These Loan Guidelines must be completed before loans can be made from your deferred compensation plan.You should consider each option carefully before making your selections because your selections will apply to all loans made while the selection is in effect. If you later change any provision, the changes will apply only to loans made after the change is adopted. Loans in exist- ence at the time of any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made. Note: If you have more than one 457 provider or if loans are available to your employees from another retirement plan (e.g. Section 401 money purchase or profit sharing plan) there are some important issues you should consider prior to completing these Loan Guidelines. Please refer to the "Special Circum- stances" section of the RC brochure titled "A Guide to Establishing a 457 Deferred Compensation Loan Program". The following instructions correspond to the informa- tion you must complete beginning on the next page. Name of Plan: Please state the Employer's complete name. including State. II. Eligibility You may allow a loan to be taken either (1) for all purposes or (2) only in the case of hardship or other certain specified financial situations. The option you choose will have a significant impact on the number of loans made from your plan. If you choose "for all purposes", you will be contending with significantly more loan requests than if you select "hardship or other specified financial situations only". III. Frequency of loans You may elect to allow participants to have either (1) only one loan outstanding at a time or (2) no more than five loans outstanding at one time (but no more than one per calendar year). The option you choose will have an impact on the number of loans made from your plan. It will also have a direct impact on your payroll system. Each loan repayment for each pay period must be accounted for separately. Repayments of multiple loans are a much larger burden on your payroll system (and personnel) than repayment of a single loan. X. Acceleration You have three options for determining how outstanding loans are accelerated: 1. All loans are due and payable in full ("called") upon separation from service. The employee may not continue to payoff .. I his/her loan once he/she separates from service. ~ " 2. After separation from service, all loans are called only when the participant withdraws his/her entire account balance. 3. After separation from service, all loans are called as soon as the participant takes a withdrawal of any amount from the plan. You should consider these options carefully because a call provision could result in a taxable event for the p~rticipant. If a participant does not repay the out- standing loan amount when the loan is called. the loan is "foreclosed". This means that the outstanding loan amount will be reported by RC as a taxable distribution to the participant in the year of the foreclosure. On the other hand, given the burdens associated with collecting loan repayments from former employees, you may not wish to maintain a potentially long term "rela'tionship" with former employees (especially in the case of residential loans) . .................... I............................................................................