Update to Loan Interest Rate

PLAN LOAN INTEREST RATE DECREASED FROM 5.75% TO 5.25%

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 March 4, 2020.

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. In late October, the Fed set the range at 1.00% to 1.25%. This is a decrease of 0.50% over the prior Target Rate.  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.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

  • The maximum number of loans a participant may leave outstanding at any time is two.

  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

2020 Tactical Model Report

The Dauphin County, PA Deferred Compensation Plan Tactical Models will remain in their maximum High Risk Category allocations. As of this post, the U.S. and international equity trend indicators and the Balance of Strength Signal are all positive, so the models will maintain their maximum exposure to High Risk Category investments. In the models, there are small changes to decrease stable value exposure, increase bond exposure, and adjust the allocation within the High Risk Category investments.  The models are utilizing a high exposure to the T. Rowe Price Capital Appreciation Fund (PRWCX), so the models have slightly less than their maximum stock exposure because PRWCX is composed of roughly 60% stocks and 40% fixed income.  We are taking this position with the goal of reducing volatility while attempting to pick up the majority of the upside a fully invested stock allocation would have.  Changes to the models will be made the week of January 13th.  Should the market environment deteriorate during the quarter, we will either hold the current allocations or make changes to become more conservative. We encourage you to read the report using the link below and Contact Us if you have questions.

Contribution Limits Increase for 2020

2020 retirement plan contributions were recently announced and the contribution limits will increase in 2020 as follows:

  • Annual maximum participant contributions will increase from $19,000 to $19,500.

  • For participants age 50 or older in 2020, the annual catch-up contribution will increase from $6,000 to $6,500, which is a maximum annual contribution of $26,000.

This makes the maximum contribution per pay for employees under the age of 50 (26 pays) $750 and $1,000 for participants age 50 and older in 2020. The Special Catch-up Contribution will move to $39,000 in 2020.

Changes to your payroll deductions may be made online at the Alerus Participant Website or by contacting HR. If you have questions, please Contact Us.

Update to Loan Interest Rate

PLAN LOAN INTEREST RATE DECREASED FROM 6.00% TO 5.75%

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 October 31, 2019.

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. In late October, the Fed set the range at 1.50% to 1.75%. This is a decrease of 0.25% over the prior Target Rate.  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.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

  • The maximum number of loans a participant may leave outstanding at any time is two.

  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

2019-10 Tactical Models Intra-Quarter Update

At the beginning of the quarter, the Plan’s Tactical Models remained in their more conservative allocations. The models will be updated shortly to move close to their maximum High Risk Category investment allocations. Use the link below to read the Tactical Forecast Report that reviews the Plan's Tactical Models. If you have any questions or would like to review your account, you can Contact Us.

2019 Q4 Tactical Models Report

For the beginning of the quarter, the Plan’s Tactical Models will be remain in their more conservative allocations. If the market environment changes for the better, the models will increase their exposure to high risk category investments. If the market environment deteriorates, the models will either maintain their current allocations or may become slightly more conservative. Use the link below to read the Tactical Forecast Report that reviews the Plan's Tactical Models. If you have any questions or would like to review your account, you can Contact Us.

Update to Loan Interest Rate

PLAN LOAN INTEREST RATE DECREASED FROM 6.25% TO 6.00%

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 affect August 1, 2019.

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. In mid-September, the Fed set the range at 1.75% to 2.00%. This is a decrease of 0.25% over the prior Target Rate.  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 raised its Target Rate in December.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

  • The maximum number of loans a participant may leave outstanding at any time is two.

  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

Update to Loan Interest Rate

PLAN LOAN INTEREST RATE Decreased FROM 6.50% TO 6.25%

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 affect August 1, 2019.

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. In late July, the Fed set the range at 2.00% to 2.25%. This is a decrease of 0.25% over the prior Target Rate.  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 raised its Target Rate in December.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.

  • The maximum number of loans a participant may leave outstanding at any time is two.

  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.

  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.

  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.

  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

This site is intended for the employees of Dauphin County.  It contains information on the Dauphin County, PA Deferred Compensation Plan, educational material, and investment and financial planning resources provided by Retirement Collaborative LLC.  In order to access the website content, please log in.  If you would like to access the Plan's participant website, select Access Account.  On the Plan's Participant Website, you will be able to view and make changes to your account.  If you have questions, please contact Retirement Collaborative LLC at 717-545-1447.

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