Loan Module User Guide

This guide is meant to give a quick tour of the Loan Module in the ftwilliam.com compliance software. Contact support@ftwilliam.com or call (800) 596-0714 with specific questions.

Q.S. Tip: If you use the ftwilliam.com document software, the loan module is activated by the loan options in Section J of the checklist; specifically question J 30 needs to be answered as Yes. 

Part 1: Loan Module Set-up

All of the first links shown are from the Plan Compliance Menu, the homepage for the compliance software, at the top right of the home screen.

Prior to working in the loan module, you should set-up loan distribution hierarchies for sources and investment accounts. Note that loans are tracked as an investment in the ftwilliam software.

1.1. Loan Module Setup - Sources

You first need to add a loan fund as an investment account. Select: 'Plan Specifications', then Edit'. Click the ‘Work with Sources/Investment Accounts’ link. Select 'Yes' for 'Use Investment Accounts to track Participant balances'.

You should see a list of all sources allowed by the plan on this screen. If not, click the ‘Add Default Sources’ link. Suppress any sources that are not used. Next click the 'Loan Source Distribution/Hierarchy' link. This is where you can indicate which sources are available for loans. Click 'Update'.

Select either 'Pro Rata' (across all available sources), or 'Ordering Rule' for the way loans are distributed. If you select the latter you will need to enter sequence numbers to indicate how the sources should be ordered when a loan distribution is processed - the loan will be taken from the source with the lowest number first. Click 'Update', then close the window and return to the source setup screen.

1.2. Loan Module Setup - Investment Accounts.

Click the ‘Work with Investment Accounts link. On the Inv Account Setup screen, add a loan fund as an investment option.  Suggested Account ID is 'Loan', 'Account Name' and 'Account Description' can both be 'Loan Fund'.  Whatever you enter as the account name is what will show on the financial reports and participant statements. 'Type' should be 'Cash'.

Q.S. Tip: You will need at least one other investment account in addition to the loan fund; for more detail on setting up investment accounts, please see the full User Guide or the Quick Start Guide.

Still on the Inv Account Setup screen, click on 'Loan Inv Account Distribution/Hierarchy'. This is where you indicate which of the investment accounts is the loan fund, and which accounts allow loans; note that the loan fund should NOT be available for loans. When you have made changes to this screen, click 'Update'.

Also on this screen, select either 'Pro Rata' or 'Ordering Rule' for the way loans are distributed from the available accounts.  Pro-rata means the loan will be taken pro-rata from all available accounts; to use the Ordering Rule you will need to enter sequence numbers to indicate how the investments should be ordered when a loan distribution is processed - the loan will be taken from the account with the lowest number first. Click 'Update' when you are done.

If all investments can be used with all sources, check the ‘Add all Investments to all Sources’ box. Close the investment accounts window; if you did not add all investments to all sources you will need to indicate which investment accounts can be used with each source – note that you can add investment accounts to multiple sources at once by selecting them and using the ‘Do with selected’ drop-down.

Part 2: Create a New Loan in the Loan Module.

All of the first links shown are from the Plan Compliance Menu, the homepage for the compliance software, at the top right of the home screen.

Note that the loan module is separate from the Transactions/Statement Menu until you post loans, payments and earnings to the Transactions/Statement Menu. Also note that loans need to be processed and posted in the correct year in the system.

2.1. Create a new participant loan

Select ‘Transactions’ then ‘Loans’ from the Compliance Menu, then click ‘Add New Loan’ and either select a pending loan or click ‘Add New’.  If adding a new loan you will see a list of participants in a drop-down box; select the participant for whom you want to add a loan, enter a description for the loan and click 'Create New Loan'. On the next screen you will see the amount that is available for a loan, based on data from the Transaction menu; if this is not accurate you can click 'Max: Review/Edit' to override the available amount

Q.S. Tip: For the available amount  fields to be populated you must have transactions posted and you must have viewed the data by printing statements in the Transaction Menu.

You need to enter the following information:

  • Origination date - must be within the current plan year
  • Principal (amount being borrowed)
  • Annual Interest rate – if the rate is linked to prime you can look up the current prime rate
  • Repayment Type – select number of payments or payment amount and enter the number or amount in the field below
  • First repayment date
  • Adjust the other options as required including repayment rules and amounts of any loan fees
  • Click the update button when you are done

2.2. Print Paperwork and Post Transactions

Click the 'Print Loan Documents and Post Transactions' link to see the following options:

  • Print loan paperwork - there's an amortization schedule available in Microsoft Word or Excel and a promissory note available in Word; or you can produce the two together in Word. Click one of the icons to print.
  • Click on 'Post Loan' to create a transaction batch showing the loan initiation. Click 

Part 3: Servicing Loans and Loan Reports

Select ‘Transactions’ then ‘Loans’ from the Compliance Menu to get to the main loan screen.

3.1. Posting Loan Repayments. 

On the main loans screen you will see details of loan repayments due. There are options at the top of the screen on which loans you see and the date range of repayments that you see - you can select to see repayments due in the next 7, 15, 30, 45, 60 or 90 days, either for all loans or one specific loan. Or you can enter a date range to select all loan repayments within this range. Then you can select the payments you want to post. Before posting you can adjust the payment dates - these default to the due date - and add any additional interest, and/or principal payments made if the plan allows it.

Q.S. Tip: Any payment with ‘Added Principal’ payment must the only payment being processed for that participant in the current updating and posting. This allows the software to recalculate the remaining repayments.

Once you have made any adjustments to payments, check the payments you want to post, and then click the ‘Post Loan Payments’ link. This will create two transaction batches, one moving amounts of principal from the loan fund to other investments(s) and one showing interest payments. The batches go to the pending area in the Transaction menu; when you move them to the posted, area the loan payments will be reflected in the financial reports and participant statements.

3.2. Defaulting a Loan (Deemed Distribution). 

Click the 'Global Loans Report' link. Select the loan from the 'Active Loans' drop down box and click the 'Select' button. Click the 'Default Loan' link. You'll see a screen where you can adjust the default date, which populates with a date based on the due date of the next loan repayment plus the length of the grace or cure period. If you do change this date click the Update button, then click the 'Post Loan Default' button to create a transaction batch, showing the loan default interest. The batch go to the pending area in the Transaction menu; when you move it to the Posted area the loan default will be reflected in the financial reports and participant statements.

Q.S. Tip You may ‘Perform the Loan Offset’ immediately after posting a defaulted loan if the participant has had a distributable event, or hold in the system until an event occurs.

3.3. Offsetting a Defaulted Loan

Click the 'Global Loans Report' link. Select the loan from the 'Defaulted Loans' drop down box and click the 'Select' button. Click the 'Default Loan' link. You'll see a screen where you can adjust the offset date, which populates with the date of the default.  If you do change this date click the Update button, then click the 'Post Loan Offset' button to create a transaction batch, showing the loan offset. The batch go to the pending area in the Transaction menu; when you move it to the Posted area the loan offset will be reflected in the financial reports and participant statements.

Q.S. Tip: All loan transactions for the participant in question must be posted for the loan offset transaction to calculate correctly.

3.4. Deleting a Loan

Click the 'Global Loans Report' link. Select the loan from the 'Defaulted Loans' drop down box and click the 'Delete' button. Note that you will need to un-post and delete any transaction batches associated with the loan from the Transaction menu.

3.5. Loan Reports

Click the 'Global Loans Report' link; you have options here to print a list of all loans as of the date you select, or to print the annual loan report.

Part 4: Conversion Loans

There are two options for handling loans from a prior vendor; either you can add them to the ftwilliam.com loan module, or you can manually create transaction batches showing outstanding balances and repayments, and just use the loan module for new loans. If you choose to use the loan module, our suggested method is described below.

4.1. Creating a Conversion Loan

  1. Follow the steps to add a new loan using the following :
  • Description - 'Conversion Loan'
  • Origination date - one pay period before the first repayment due on the former vendor's amortization schedule - you want the first payment on the ftwilliam schedule to be the same date.
  • First Repayment Date – enter the first repayment due on the former vendor's amortization schedule
  • Principal – enter the amount of the outstanding loan at the time of conversion
  • Annual interest rate  - enter the annual interest rate being paid on the loan
  • Number of payments – enter the number of payments outstanding at the time of conversion
  1. Click the 'Print Loan Documents and Post Transactions' button on the New Loans screen. Review the amortization schedule and compare with the one from the prior vendor. If amounts are different, check dates and amounts - you may need to delete the loan and re-add with adjusted numbers.
  2. Once you have an amortization schedule comparable with the one from the prior vendor, from the same screen click the 'Post Loan' link and confirm that you want to post the loan by clicking 'Yes'.
  3. Go to the Transaction/Statement menu - you will see a Loan Distribution batch in the Pending area of the Select Batch box, showing amounts moving from the investment account(s) to the Loan Fund. Open the batch and make a note of these amounts by source. DO NOT POST THE BATCH!

4.2. Adding Loan Balances

In the Transaction Menu, on the Beginning Balances batch, add the amounts noted in the Loan Fund by source as beginning balances.

4.3. Loan Repayments

You can create and post loan repayment batches using the loan module for the conversion loan the same way that you would for new loans.