If your plan allows it, you may borrow against your retirement account while agreeing to repay the balance, plus interest, within a specific timeframe. Loans generally have a term of 1-5 years, although your plan may allow a longer term if you use the loan to purchase a principal residence.
Your loan must be repaid through payroll deductions or paid out in full through a lump sum payment. Your employer may withhold a specified amount from your paycheck every pay period and submit it directly to Vestwell until the loan is fully repaid.
Savers can take out a loan from the vested balance of their plan. The IRS limits a loan amount to over $50,000 or 50% of the saver's vested account balance. The plan may have restrictions, such as how many loans a single saver can have outstanding or how many loans a plan can have at any given time across all savers. You can learn more about requesting a loan here.
Where Can I Go to Learn About My 401(K) Plan’s Loan Repayment Options?
Access your 401(k) plan's Summary Plan Description (SPD) and/or Loan Procedures, which can be found on your Vestwell portal, following the steps below:
- Log in to your Vestwell portal.
- Navigate to the "Documents" tab.
- From the "Documents" page, select the Plan tab.
- Scroll down to the "Program Notices," and select the document you want to review by clicking the PDF button.
How Do I Repay My Loan?
Your loan must be repaid through payroll deductions or paid out in full through a lump sum payment. Your employer may withhold a specified amount from your paycheck every pay period and submit it directly to Vestwell until the loan is fully repaid.
How Do I Payoff My Loan in Full?
You can pay off a loan in full through your saver portal.
- In your portal, navigate to the "Account" tab. Once in there, select Loans.
- Click on your highlighted loan under the "Amount" section.
- Here, you will see two tabs, "Payment Schedule" and "Pay Off Loan." Select Pay Off Loan.
- You will see the total payoff amount here. Select Submit Repayment.
- If you have no saved accounts, select Add a New Account. Follow the steps to link your bank account that you will use for the payment. Vestwell will withdraw the amount from the account established within the next three business days.