Exhibit 4.9(b)
THE NORTHERN TRUST COMPANY THRIFT-INCENTIVE PLAN
LOAN ADMINISTRATION GUIDELINES
LOANABLE AMOUNTS
You may apply to borrow against your vested balance in TIP. The amount of funds
which can be borrowed will be based on the following IRS Tax Reform limits.
Value of Your Vested Maximum
Account Balance Loan Amount*
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Less than $100,000 50% of Your Vested Account Balance
More than $100,000 $50,000
*If you currently have a loan outstanding, or had a loan outstanding within
the previous 12 months, you will find your maximum loanable amount stated on
page 2 of your most recent TIP statement. The maximum amount is calculated
as the lessor of:
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1. 50% (your vested account balance + your outstanding loan balance)-your
outstanding loan balance, or
2. $50,000 less your highest outstanding loan balance during the last 12
months.
HOW LOAN MONEY IS DISBURSED
When you take a loan, the money will be disbursed from your accounts in the
following order until the respective funds are depleted.
TIP Account Order of Loans
1. Rollover Fund A, B, C-M, then C-I
2. ESOP Diversification Fund A, B, C-M, then C-I
3. Vested Bank Matching Cont. Fund A, B, C-M, C-I, then D
4. After-tax Fund A, B, C-M, then C-I
5. Bank Basic Fund A, B, C-M, C-I, then D
6. Before-tax Fund A, B, C-M, then C-I
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LOAN APPROVAL CRITERIA
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Approval of loan applications will be based on the following criteria:
1. The loan application is completed and submitted within the specified deadline
dates.
2. If the loan is to exceed the 5-year period, a copy of the home purchase
contract must be submitted with the Loan Request form.
3. The loan amount requested is available and meets the IRS Tax Reform limits
shown above. (The amount available is reflected on page 2 of your quarterly
TIP statement.)
4. Your net pay must be a minimum of $100.00 per pay period after the loan
repayment deduction is taken.
Your will receive written confirmation of receipt of your loan request.
LOAN REPAYMENT
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The term of the loan is determined by you and cannot exceed 60 months (except
home loans which can be up to 180 months). Loans will be repaid via semi-monthly
payroll deductions for both principal and interest. Repayment will begin the pay
period immediately following payout of the loan.
If you do not have sufficient pay to deduct a payment, you are required to
submit a personal check for the payment amount or an additional deduction amount
will be taken in a future pay period to collect the missed payment. If you are
an active employee and receiving pay, but do not make a payment for a 90-day
period, your loan will be defaulted and reported to the IRS as a taxable
withdrawal. If you are on an unpaid leave of absence (including Long Term
Disability and Family Care Leave) and do not make a payment for a one-year
period, your loan will be defaulted and reported to the IRS as a taxable
withdrawal. If you have a loan that is defaulted, you will be prohibited from
taking a new loan for a two-year period.
PREPAYMENT OF AN OUTSTANDING LOAN
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Prepayment of a loan is permissible. The following administrative guidelines
have been established:
1. Prepayment may be for the total remaining principal balance only.
2. Prepayment checks must be received a minimum of 6 business days prior to a
payday in order to cease deductions on that payday.
3. If your employment is terminated, you may repay the loan in full up to 5
business days after the end of the processing cycle in which you
terminate. (See Loan at Termination of Employment)
Upon scheduled payoff or prepayment of an outstanding loan, one quarter must
elapse before an application for a new loan can be made; if you have two loans
outstanding, assuming Tax Reform rules/limits previously mentioned are met.
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LOAN AT TERMINATION OF EMPLOYMENT A loan from TIP is not considered a taxable
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payment unless the entire balance is not repaid to the plan.
Active Employees
If a loan amount is not repaid and is declared defaulted while you are
employed, the defaulted amount that was originally from taxable funds is
reported as a taxable loan distribution. The taxable loan distribution is not
subject to the 20% withholding and is not eligible for rollover.
Terminated Employees
If a loan is not repaid in full by the end of the calendar quarter in which
you terminate, the remaining balance that originally came from taxable funds
will be taxable as ordinary income and a 10% penalty tax may apply.
The election you make regarding the payment of your remaining account balances
will determine whether 20% tax withholding on the loan amount will be deducted
from your distribution.
If there are any funds being paid to you, either before-tax funds that are not
directly rolled over or after-tax funds, 20% withholding on the loan amount will
be withheld from the check.
TAXABLE LOAN DISTRIBUTION
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20% Tax Withholding Eligible for Rollover
Payment Option Within 60 Days
Yes No Yes No
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1. Defer payment of account balance X X
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2. Direct rollover account balance X X
to IRA employer Plan
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3. Distribute account balance payable X X
to you (or any portion, before-tax
or after-tax paid to you)
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INTEREST RATES
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Rates will be established quarterly on the first day of the last month of the
quarter and will be announced in the Northern News at the next earliest date.
The interest rate is based on the rate for a commercial loan secured by a
savings account. The interest rate in effect at the time of the loan will be
fixed for the entire term of the loan. All interest paid on a loan from TIP is
credited back to your TIP account.
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CRITERIA FOR HOME LOAN - 61 TO 180 MONTHS OF PAYMENT
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A home loan is considered a loan to purchase a single family principal
residence. For purposes of IRS interest deductibility, a TIP loan is considered
a personal loan, and not a mortgage. Refinancing of a principal residence and
costs associated with remodeling or rehabilitation of your primary residence are
not acceptable home loan reasons. If a home loan is fully amortized and if you
transfer title on the property, the loan will continue in effect until its
maturity date.
APPLICATION PROCESS
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You must complete a TIP Loan Request form, and forward it along with a copy of
your most recent TIP statement to the TIP Administrator, M-8, no later than the
15th day of the third month of the quarter. (March 15, June 15, September 15,
December 15) Home loans requested in excess of 60 months require a residence
purchase contract accompanying your request.
The Benefits Division will provide:
* Promissory Note/Truth-in-Lending Statement
* Amortization Schedule
Prior to release of the check, the Promissory Note must be signed and submitted
to the Benefits Division before the loan check can be distributed to you. The
Amortization Schedule will be sent to you with the TIP loan check.
For more information on TIP, see your Source Book or contact the TIP area at
(312) 444-7613 or (312) 444-4416.
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