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. Every pay period, your employer will withhold a specified amount from your paycheck 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 greater than $50,000 or 50% of the participant's vested account balance. There may be restrictions in the plan, 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. 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:
- Log in to your Vestwell portal.
- Select the second to last tab on the left called 'My Plan'
- Your plan documents and notices are available under the 'My Plan' tab.
- Navigate to the 'Plan' tab and navigate down to the 'Program Notices' select the document you want to review.
How to Payoff My Loan in Full?
If you are looking to pay off your loan in full, please email us at firstname.lastname@example.org with your full name, 401(k) Plan Name, and your intentions for loan payoff instructions, as this varies from plan to plan. We will then reply with the applicable loan payoff instructions.