Federal Prime Interest Rate Increased to 7 Percent

Effective November 2, 2022, the federal prime interest rate increased from 6.25 percent to 7 percent. 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 December 14, 2022.