Minimum loan amount is $2,500. However, you must have a minimum combined account balance of $5,000 in one IRS code (pre-tax and/or after-tax (Roth) accounts). Maximum loan amount is 50% of a participant’s account balance not to exceed $50,000, less the highest remaining loan balance for the prior 12 months of other obligations from this or other plans offered by an employer.

No. Only ONE outstanding loan is allowed at a time, aggregated across all plan types.

No.

No. 457(b) and 401(k) participants are borrowing funds from the Plan’s Master Trust. Participants in a 403(b) plan are borrowing from the Group Custodial Account.

No. Repayments must be made via ACH from a checking or savings account, and it will be with after-tax dollars.

There is a $50 application fee and a $50 annual maintenance fee. All fees are non-refundable.

Prime Rate + 1%. “Prime Rate” is defined as the Prime Rate published by The Wall Street Journal two weeks prior to the end of the most recent calendar-year quarter.

Payoff is expected within five years, except for primary residence loans which are fifteen years. The borrowed amount, plus interest, can be paid off in full anytime without a penalty. You can obtain a projected payoff quote online or by calling Nationwide Customer Service.

No. Payments can only be made via ACH auto payments during the term of the loan or the balance can be paid off in a lump sum at any time!

No. The Uniformed Service Employment & Reemployment Rights Act (USERRA) allows for suspension of loan repayments for participants who are on active duty.

Yes. An existing general-purpose loan may be restructured up to the maximum term of five years from the initial origination date. Restructuring from a 15-year primary residence loan to a 5-year general-purpose loan is permitted if no additional funds are withdrawn.

No. You may not have an active loan if you wish to take a payout or distribution from the same IRS type.

Yes. You may have an outstanding loan in a 457(b) and take a payout or distribution from a 401(k), or vice versa.

No. The loan needs to be satisfied if using the same IRS type that the RMD is coming from.

Yes. You can borrow after separation from service, including retirees.

No. Retirement, separation of service, or death, are all considered “Offset Triggering Events” which means they trigger an offset of the loan or obligation. The remaining balance will be treated as a distribution and deducted (offset) from the account balance resulting in a reduction of the participant's Plan account balance by that amount. The participant will receive a 1099-R for the year of the offset. (Receiving a 1099-R means that the IRS considers this to be a taxable distribution.)

The loan is in default if two consecutive payments are missed.

Step One: If a requested monthly payment is not sufficient, a cure period of 30 days is established, and a scheduled default date is established. A cure period is the time period that the borrower has to remedy a default before it becomes an event of default.

Step Two: On the next repayment due date, the come-current payment, payment amount due to Date, will be requested by Nationwide.

Step Three: If the come-current payment is not successful, the loan will be considered defaulted and will be a taxable event. Once the loan is in default, the participant will receive a 1099-R for tax purposes the year in which the default occurred. Receiving a 1099-R means that the IRS considers this to be a taxable distribution.

In the year of the default, defaulted amounts are reported to the IRS as deemed distributions. The entire remaining balance will be included in your income and subject to income tax and any applicable penalty tax. In addition, there is an Annual Default Fee and interest continues to accumulate on the remaining balance.

$50 initial default fee and a $50 annual default fee until the remaining balance and accrued interest is paid back in full.

If a participant failed to make payments on a Plan loan and the loan is in default, the missed payments can still be made even after a deemed distribution (1099-R) has occurred. Receiving a 1099-R means that the IRS considers this to be a taxable distribution. A participant can make a lump sum payment for the missed installments (including interest). OR, re-structure the remaining balance of the obligation, including unpaid interest for a period that does not exceed the original term. OR, make partial re-payments on the remaining balance via ACH or personal check.

No – not until the defaulted loan is repaid in full, including accrued interest and fees. Failure to repay a defaulted loan will potentially limit a Participant’s ability to take additional loans from the Plan.

Yes. If a defaulted loan has been paid back in full, then the account could be used as collateral for another loan.

MSRP

Provides information about MSRP, educational programs, investment options booklets, mutual fund prospectuses and other general information.
1-800-543-5605 or 1-410-767-8740
http://msrp.maryland.gov
info.msrp@maryland.gov

Maryland State Retirement and Pension System

Provides valuable program and contact information on the Maryland State Retirement and Pension System.
1-800-492-5909 or 1-410-625-5555
http://sra.maryland.gov

State Employee Benefits Office

Provides info about Health Insurance and other benefits, as well as Information about jobs, State holidays and emergency closings.
1-800-705-3493
http://dbm.maryland.gov/employees

Central Payroll Bureau

Select "State Payroll Services" for information about the Payroll Online Service Center which has information about direct deposit, withholding tables, net pay calculator, other reports and schedules.
1-888-674-0019 or 1-410-260-7401
http://comptroller.marylandtaxes.com
cpb@comp.state.md.us