401k loan

Overview

Through its loan feature, the Savings Plan offers you access to your savings and gives you the opportunity to borrow against your account balance, up to the limits described in the section “How Much You Can Borrow.” You repay the loan — including interest — to your own account.

If you are an active employee, on paid leave with sufficient pay to make repayments, or on military leave, you can borrow money from your Savings Plan account through two types of loans:

• General purpose loans, which you can take for any reason
• Residential loans, which you can use to purchase your primary residence. A residential loan cannot be used to refinance another loan or pay off an existing mortgage.

Request a Loan

Generally, loan requests are processed on your date of request, and your loan check typically is mailed to you within three business days.

In some situations, you may have to submit additional documentation as part of your loan application, as described below under “Required Documentation.” If additional documentation is required, your loan request is processed on the date the signed and completed required documentation is approved, and your loan check typically is mailed to you within three business days.

Required Documentation

If your loan request is for the purchase of your primary residence, you must submit documentation of that purchase in the form of the following:

• A purchase agreement, sales contract, or builder’s construction contract dated within 30 days of the plan loan application
• A financing agreement signed by both buyer and seller
• A good faith estimate of closing costs and down payment.

How Much You Can Borrow
Your loan must be in a whole dollar amount at least equal to $1,000. The maximum loan amount for which you are eligible is the lesser of:

• $50,000 (less the highest amount of all outstanding loan balances, if any, you had during the previous 12-month period), or
• One-half of your account balance, excluding your Retirement Account contributions balance.

You can have up to two loans outstanding at a time, but only one of them can be a residential loan.

Interest Rate and Fees

The interest rate on your loan is one percentage point above the prime interest rate reported in The Wall Street Journal as of the last business day of the month preceding the month in which you make your loan request. For example, if the prime rate is 3.25% on the last business day in May and you request a loan in June, the interest rate for your loan is 4.25% (3.25% + 1.00%). Generally, this rate is fixed for the life of the loan.

In addition to interest, you must pay a non-refundable $75 loan processing fee. This fee is deducted from the proceeds of your loan.

Interest is amortized over the life of your loan. Each repayment includes principal and interest.

Repaying Your Loan

You must repay a general purpose loan over a one- to five-year period. For primary residence loans, the repayment period is up to 15 years.

You can repay any loan in full at any time without penalty. Your payment must be made by certified check, cashier’s check, or money order (personal checks are not accepted). Partial prepayments are not allowed.