Q. We are uncertain how to treat the loan terms when our participant is consistently making extra payments. The original loan was calculated with principal and interest amortized over the 5-year payback period. Do the extra payments mean that we should recalculate for the remaining term of the loan?
A. No, the original terms of the loan should remain intact. The participant will, in fact, automatically save interest on the loan with an early payback because of the extra payments.