I have been a full-time employee for three years and I want to know if I can I get a loan from my 401 k?
To determine if you can get a plan loan from your 401(k) plan, you may do the following:
- When you entered the plan you should have been given a Summary Plan Description ("SPD") from your employer or the financial institution that holds the 401(k) monies for all participants. The SPD should tell you if there is a loan feature in your plan. Also,
- You may contact your employer's Benefits, HR, or Payroll Dept. and inquire if loans are allowed and how to request one.
- You may contact the plan's TRA (Third Party Administrator), or the Financial Institution that holds the plan's assets, to ask for loan feature and request method information.
If you find that you can take a loan, the maximum amount of your first loan is the lesser of either 50% of your vested account balance, or $50,000.00. And generally, the loan must be paid back with payments made no less often than quarterly, and have a term of no greater than 5 years (unless the loan is used to purchase your principal residence).
Hope this helps.
Herbert Glass, Certified Pension Consultant
Glass Retirement Strategies, Inc.