USA Do I need to keep in my books an employee's 403B loan?

[Vicente]

Hi,

This is my first time asking a question and I hope I can get the best answer.

2 employees got 403B loans and we have a discussion with a colleague about keeping this process (loan and payments) in our books or not, I think we shouldn't but she's suggesting to record the original loan as a liability and then the payments offsetting the liability (When are going to offset the liability? Perhaps it's not the company loan).

The question is: Should we or should NOT pass an entry? If the answer is yes, which accounts should we use?

Thanks in advance

 

[Nodrog]

If a 403b loan is a withdrawal from the company pension scheme, which is administered separately from the company then the pension scheme will monitor and control the loan with interest charges and repayments.
The company I presume received the money to the send to the employee, so for the company it was money in then money out so amounts cancelling each other so the company books would be clear.
Hope this helps. I am sure the pension administrators would clarify the company position.

 

[Vicente]

Hi Nodrog,
The money went straight to the employee and didn't touch our company's books, the major concern is how do we record the payments coming from the employee.

 

[Nodrog]

Can I assume that you are deducting these loan repayments directly from his salary (as authorized by the employee) and this is then to be paid to the pension scheme. I would set up a pension employee loan creditor and this would match deduction from the employee and the payment to the loan company.
Also why does the employee not pay directly to the pension scheme that made the loan or is there some agreement about how the loan is repaid, with the employer responsible for collecting payments from the employer.

 

[Vicente]

Thank you Nodrog, I think I have my ideas clear now.