Federal Prime Interest Rate Increased to 4.75%
Effective June 15, 2022, the Federal Prime interest rate increased from 4.00% to 4.75%. The Prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC). As Department of Labor regulations require a retirement plan loan interest rate to be comparable to interest rates charged by entities that are in the business of lending money in similar circumstances, plan sponsors typically use a benchmark such as the Prime rate to set the interest rate on plan loans.
The next FOMC meeting is scheduled for July 26-27, 2022.