Department of Labor proposes exemptions for Y2K Loans to Employee Benefit Plansgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
[Federal Register: November 29, 1999 (Volume 64, Number 228)]
DATES: If adopted, the proposed amendment would be effective from November 1, 1999 through December 31, 2000. Written comments and requests for a public hearing should be received by the Department on or before January 13, 2000.
C. Discussion of the Proposed Exemption
The Department, on its own motion, proposes an amendment to PTE 80-26 in order to expand its interest free loan exemption to address potential Y2K problems. The Y2K problem is a computer problem where date-dependent computations or operations produce erroneous results because systems recognize years only by the last two digits, causing a ``00'' entry to be read as the year ``1900'' rather than the year ``2000''. Congress has passed several Acts to address the Y2K problem and has found that it could incapacitate systems that are essential to the functioning of markets, commerce, consumer products, utilities, government, and safety and defense systems, in the United States and throughout the world.
Furthermore, there is some uncertainty about the cost and availability of funds to individual depository institutions. Potential liquidity exigencies created by Y2K might arise from the conversion of deposits to currency, heightened credit demands, greater lender and depositor caution, and potential market disruptions.
The potential liquidity problem created by Y2K could be detrimental to employee benefit plans in trying to meet the many demands of plan participants and beneficiaries. Plan officials need to assure themselves that sufficient liquidity is available to pay benefits and administer the plan, including transfers among investment options, distributions, hardship withdrawals, health claim payments, and loans to participants and beneficiaries. In addition, employee benefit plans may incur costs associated with addressing and fixing Y2K problems that may arise. As a result, the Department has determined to amend PTE 80-26 to expand its provisions for interest free loans to employee benefit plans to meet Y2K contingencies.
-- Pete (email@example.com), December 03, 1999