Taking a 401(k) loan means borrowing money from your retirement savings account. A 401(k) loan does not involve a lender or an assessment of your credit history, thus they are not technically a true loan. They simply give you the ability to access a portion of your own retirement plan money on a tax-free basis. Per the IRS, 401(k) loans can typically be borrowed in the amount of $50,000 or 50% of your 401(k) account balance, whichever is less. You must repay the money you have accessed under rules designed to restore your 401(k) plan to its original status.
Any “profit-sharing” retirement plan provider may offer loans but are not required to under law. The terms of the loan’s repayment vary depending on the provider. Any loan amount will be withdrawn from the distributor’s own retirement account. If the loan repayment schedule is followed, the withdrawal will not be taxed. To check if your plan offers loans, check with your plan sponsor, or the Summary Plan Description. To check if you meet the requirements for a 401(k) loan, or to apply, speak with your plan administrator.
Saveday’s loan application is available in the Plan section of your saveday employee dashboard. Processing typically takes 2-3 weeks.