457 Plan Loans and Emergency Withdrawals

Your employer may allow you to borrow money or request emergency withdrawals from your 457 plan under certain conditions. Keep in mind that each 457 plan has its own rules for borrowing and repaying loans, and its own set of conditions for making emergency withdrawals. It’s important that you carefully review your plan’s terms.

457 Plan Loan Rules

If your 457 plan allows loans, the minimum amount is $1,000, and the maximum can vary. You can typically borrow up to 50% of your vested balance or up to $50,000 – whichever is less.

Some plans have an exception to this limit: If your vested balance is less than $10,000, you can borrow up to your full vested balance. Not all plans include this provision, so check with your employer.

Requesting a Loan from Your 457 Plan

To take out a loan from your 457 plan, log into your MissionSquare account or contact your employer.

457 Loan Repayment

The 457 loan agreement details the repayment terms for the loan. The maximum loan length is five years unless the loan is for the purchase of a primary residence, then the maximum period is up to 30 years. Your employer sets the repayment schedule, which could range from weekly to quarterly.

Using Your 457 for an Emergency

Your employer may allow you to make an emergency withdrawal as long as certain conditions are met. Approval is not automatic and requires adequate documentation demonstrating your need for the withdrawal.

An emergency might be:

  • Foreclosure of your primary residence
  • Eviction from your primary residence
  • Funeral expenses
  • Involuntary lost wages
  • Legal fees involving criminal charges
  • Unreimbursed medical expenses
  • Property damage due to accident or natural disaster (beyond insurance reimbursement)

If the request is approved, withdrawals are taxed as ordinary income and there’s no early withdrawal penalty.

You can withdraw the amount needed to cover the emergency, which could be up to your entire vested balance. When you apply for the withdrawal, you need to show that the amount of your withdrawal is specifically for the emergency that prompted you to make the request. To request an emergency withdrawal, log into your MissionSquare account, or contact your employer.

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