Repaying Your Loan While Employed

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 will 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 participant's vested account balance. The plan may have restrictions, such as how many loans a single participant can have outstanding or how many loans a plan can have at any given time across all participants. You can learn more about 'How to Request a Loan'.

Where can I go to learn about my 401(k) plan's loan repayment options?

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:

  1. Log in to your Vestwell portal.
  2. Select the second to last tab on the left, 'My Plan.'
  3. Your plan documents and notices are in the 'My Plan' tab.
  4. Navigate to the 'Plan' tab, navigate down to the 'Program Notices', and select the document you want to review.

How to Repay My Loan?

Your loan must be repaid through payroll deductions or paid out in full through a lump sum payment. Your employer will withhold a specified amount from your paycheck every pay period and submit it directly to Vestwell until the loan is fully repaid. 

How to Payoff My Loan in Full?

You can pay off a loan in full through your savers portal.

  1. In your savers portal, navigate to the ‘Account’ tab. Once in here, select ‘loans.’
  2. Click on your highlighted loan under the ‘amount’ section.
  3. Here, you will see two tabs, ‘ payment schedule’ and ‘pay off loan,’ select ‘pay off loan.’ 
  4. You will see the total payoff amount; select ‘submit repayment.’
  5. If you have no saved accounts, select ‘add a new account.’
    Vestwell will withdraw the payoff amount from the account established within the next three business days.