Loans can be obtained for active employees and retirees who are enrolled in a UK 403(b) or 457(b) retirement plan.
Employees may borrow up to 50% of the balance in their 403(b) or 457(b) account with Fidelity or up to 45% with TIAA ($50,000 maximum)
The minimum amount for a loan is $1,000.
The maximum loan period is five years. The IRS allows up to 10 years for a loan solely to purchase your primary residence. Documentation is required.
There is a maximum of three outstanding loans at any time.
Each retirement carrier may have additional rules related to the type of investments involved or company policies.
Fees for loan administration charged by the retirement carrier, if applicable, may vary and are the responsibility of the employee.
Employees who default on their loan will be subject to taxation by the IRS for the entire amount of the loan and penalties, if they are under age 59½. In addition, a loan default will prohibit any future loans from your retirement plan.
Hardship withdrawals are available through TIAA after all other sources of income are exhausted, including retirement loans.
Funds available for hardship withdrawal are limited to amounts originally invested in annuity contracts and annuity invested funds equal to 1) employee 5% contributions and 2) voluntary contributions from TIAA.
Contributions to mutual funds/custodial accounts at either vendor, transfers to annuity investments, and earnings from investments are not eligible for hardship withdrawals.
Distribution amounts cannot exceed the need documented. Payments can be "grossed-up" to accommodate the 20% federal tax withholding. No maximum hardship amount.
The IRS will impose a 10% penalty for early withdrawal if the employee is under age 59½.
Documentation of need is required for a hardship withdrawal and must be submitted to TIAA along with other necessary Hardship paperwork before the withdrawal is approved.
Hardship withdrawals are available under the IRS guidelines for:
Medical expenses for the employee, employee's spouse or dependents that exceed 7.5% of the Adjusted Gross Income;
Purchase of the employee's principal residence
Post secondary education for the next semester or quarter for the employee, spouse, or dependent.
Payments needed to prevent eviction or foreclosure.