Your employer may allow you to borrow money or request emergency withdrawals from your 457(b) plan under certain conditions. Keep in mind that each 457(b) 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(b) Plan Loan Rules

If your 457(b) plan allows loans, it may establish a minimum loan amount such as $1,000. You can generally borrow up to 50% of your vested account balance or $50,000, whichever is less. Outstanding or recent loans from the employer’s plans may reduce the amount available.

Some plans have an exception to this limit: They may allow you to borrow up to $10,000, even if that amount is more than 50% of your vested balance. Not all plans include this provision, so check with your employer.

Requesting a Loan From Your 457(b) Plan

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

457(b) Loan Repayment

The 457(b) loan agreement details the repayment terms for the loan. The maximum repayment period is generally five years. A longer repayment period may be permitted if the loan is used to purchase your primary residence. The specific maximum period, which may be up to 30 years, is determined by your plan. The repayment schedule is typically quarterly.

Using Your 457(b) for an Emergency

Your employer may allow you to make an emergency withdrawal if certain conditions are met. Approval is based on the facts surrounding your request and generally requires a severe financial hardship resulting from an extraordinary and unforeseeable circumstance beyond your control. You’ll also need to provide adequate documentation demonstrating your need for the withdrawal.

An emergency might be:

• Foreclosure of your primary residence
• Eviction from your primary residence
• Funeral expenses
• Unreimbursed medical expenses
• Property damage due to accident or natural disaster (beyond insurance reimbursement)

If the request is approved, the taxable portion of the withdrawal is generally included in ordinary income. The 10% early distribution tax generally does not apply to distributions from a governmental 457(b) plan, although exceptions may apply to certain amounts rolled into the plan.

You can withdraw only the amount reasonably necessary to satisfy the emergency need. When you apply, you’ll need to show that the requested amount is specifically for the emergency that prompted your request.

Apply for an Emergency Withdrawal

Log in to your MissionSquare account to request a withdrawal.