PLAN LOAN INTEREST RATE DECREASES FROM 8.25% TO 8.00%
The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value. So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan. The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest. Essentially, you are acting as your own bank. Below is more information on how the loan interest rate is calculated and the plan's loan provisions. These new rates take effect on September 19, 2025.
THE PRIME INTEREST RATE
You might have heard that the Federal Reserve Bank (Fed) decreased its Federal Funds Target Rate (Target Rate) recently. The Target Rate is the suggested range of interest which one bank may charge another for overnight lending. The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."
The loan interest rate is based upon the prime interest rate. The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount. The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed changed its Target Rate.
The Wall Street Journal (WSJ) published a change in the prime interest rate decreasing it from 7.25 percent to 7.00 percent, effective October 30, 2025.