Savings Plus allows you to take a participant loan from your 401(k) and/or 457(b) Plan account(s), based on the loan information and loan eligibility outlined below. By taking a loan, you agree to repay the outstanding loan balance, including accrued interest within the specified time period. Your pre-tax and Roth assets will be used to determine the maximum loan amount available by plan, but the funding of the loan will be restricted to your pre-tax assets only. Since you are borrowing from your account, the loan will not affect your credit rating. You may want to consult with a tax advisor and carefully examine all of your options prior to initiating a loan.
Types of Loans Allowed: General Purpose and Purchase of Primary Residence
Loan Period: General Purpose: 1-5 years
Primary Residence: 1-15 years
Minimum Plan Balance: $10,000
Minimum Loan Amount: $5,000
Maximum Number of Loans: One outstanding loan per plan,
not to exceed two outstanding loans across both 401(k) and 457(b) Plans.
Maximum Loan Amount: The lesser of:
- 50% of your combined plan account balances from all state-sponsored plans, minus your outstanding loan balances from all state-sponsored plans on the date of your loan; or
- $50,000 minus your highest outstanding loan balances from all state-sponsored plans within the last 12 months
In addition, the maximum amount available for a loan from each plan account cannot exceed 50% of your balance in that account, minus the outstanding loan balance in that account.
Fees: We will deduct a one-time nonrefundable fee of $50 from your account upon loan initiation to cover the cost to process and handle the transaction. If you elect to have a check mailed to you, a $2 fee will be assessed. If you elect to have your loan check mailed via overnight mail, we will deduct an additional $25 from your account.
Interest Rate: The interest rate will be the prime rate plus 1%. The prime rate used will be based upon the rate published in the Wall Street Journal two weeks prior to the end of the most current calendar quarter. The rate will be effective on the first day of the next calendar quarter.
To request a loan, log into your Savings Plus account or contact a Savings Plus Solutions Center representative. See below for key information regarding loans.
You qualify for a loan from your 401(k) or 457(b) Plan account if you:
- Are a current State of California employee
- Do not currently have a loan in the plan account in which the loan is being requested
- Have a balance of at least $10,000 in the plan account (401(k) or 457(b)) in which the loan is being requested
- Do not request more than the Maximum Loan Amount as listed above
- Do not currently have a defaulted loan
- Are not a rehired annuitant, a beneficiary or obtained your account through a Qualified Domestic Relations Order
Direct Debit Repayment:
Loan repayments are deducted from the savings or checking account you designate with after-tax dollars and are invested according to your current investment allocation. Loan repayments will start approximately 30 days from the date of the loan initiation and will continue on or around that date on a monthly basis. These transactions will show up as “Nationwide Payments” in your bank transaction history. If a repayment is unable to process on the due date because of insufficient funds in your bank account or due to inaccurate banking information, Nationwide will assess a $50 insufficient funds fee from your Savings Plus account and will send you written notification. If a monthly direct deposit loan repayment is missed, the past due payment(s) plus the regularly scheduled repayment will be pulled the following month to bring the loan current. This will occur each month until the time of default.
Text alert reminders are available five business days prior to your direct debit repayment(s). To receive text reminders, contact the Savings Plus Solutions Center or visit savingsplusnow.com. Select your name in the top right corner, then chose Contact Preferences and update your alert Notification Preferences.
Payroll Deduction Repayments:
Payroll deduction was the primary method of repayment for loans initiated prior to January 2016. Payroll deduction for these loans will continue at your scheduled repayment amount until the loan is paid in full or you are no longer employed by the State of California. Your payroll deduction repayment may be converted to direct debit repayment at any time. Contact the Savings Plus Solutions Center for more information.
You can repay your loan in full at any time without a prepayment penalty. To obtain the loan payoff amount, log into your online account, select Manage account, then under More actions select Manage loans, or contact the Savings Plus Solutions Center. Once you have obtained your payoff amount, you may:
A. Schedule a direct debit payoff via the Savings Plus Solutions Center; or
B. Send a certified bank check for the full loan payoff amount using the information below
Make the check payable to:
Nationwide Retirement Solutions
Savings Plus, Your Name, Account Number or SSN, Plan Type (401(k) or 457(b))
Mail to the applicable address:
Nationwide Retirement Solutions
PO Box 182797
Columbus, OH 43218-2797 DSPF-F2
Nationwide Retirement Solutions
3400 Southpark Place Suite A
Grove City, OH 43123-4856
If you have a Personal Choice Retirement Account (PCRA), the amount in your PCRA will be included when calculating your maximum available loan amount. However, you must maintain the lesser of $2,500 or 50% of your account balance in your core account. You may be required to transfer some or all of your PCRA balance to your core account (401(k) or 457(b)) before the loan is funded.
You may borrow from your 401(k) Plan and/or 457(b) Plan accounts if you are currently employed by the State of California. You do not qualify if you are retired, working as a rehired annuitant, separated from employment, currently have an outstanding defaulted loan, or obtained your account as a beneficiary or through a Qualified Domestic Relations Order.
You have two options to model and initiate a loan request:
If you are on an approved non-military leave of absence without pay, you may be eligible to suspend your loan repayments for up to 12 months while on leave. Contact the Savings Plus Solutions Center for more information.
You may elect to continue to repay your loan at the existing interest rate. However, if the interest rate is above 6%, Savings Plus must reduce your interest rate to 6% and forgive the amount above 6% for the duration of your qualified military service leave unless you elect in writing, during or after your military leave, to have the loan’s higher interest rate apply to your loan. Contact the Savings Plus Solutions Center for more information.
You cannot transfer or rollover your Savings Plus loan to another plan and you cannot transfer or rollover a loan from another plan to Savings Plus.
If you have a payroll deduction loan, you have the option to make monthly loan repayments via direct debit from your designated bank account. If your loan is past due, you will be required to make a direct loan repayment to bring your loan current prior to converting to direct debit repayment. Additionally, you will be required to complete a Direct Deposit/Debt Authorization Form and sign an acknowledgment that you have read the Direct Debit Loan Fact Sheet to make this change. Please contact the Savings Plus Solutions Center at (855) 616-4776 to learn more about this option and to obtain the necessary forms.
If you miss any loan repayments, you have until the end of the calendar quarter following the calendar quarter in which they were missed to make them up in order to avoid default and a subsequent deemed distribution. If the missed repayments are not made by the end of this period, the outstanding loan balance, including accrued interest, will be considered in default and treated as a taxable deemed distribution. A Form 1099-R will be issued by January 31 of the following year. Once a deemed distribution occurs, you will no longer be able to take another loan in either plan until the existing loan is paid in full. The loan balance will continue to accrue interest until the loan is paid in full or is offset when you separate from state employment. If the loan is from your 401(k) Plan account, the deemed distribution may be considered an early withdrawal and may be subject to an additional 10% early withdrawal tax. There is no additional 10% early withdrawal tax if the deemed distribution is from your 457(b) Plan account.
Savings Plus Solutions Center representatives do not give legal or tax advice. Contact your legal or tax advisor for such advice.