You can borrow money from Savings Plus for any reason. When you take a loan, you borrow money from your account and pay your account back with interest. Your account isn't permanently reduced and you won't be taxed on your loan as long as you repay it.
You'll be charged a $50 processing fee, which will be added to the loan amount you request. Additionally, if you request payment by check, there is an additional $2.50 fee added to the loan amount you request.
You can request up to 2 loans in each plan. If you already have the maximum number of outstanding loans, you must pay off one of your outstanding loans before requesting a new one.
There are two types of loans available:
- General Purpose
- Primary Residence
The minimum amount you can borrow is $2,500.
The maximum amount you can borrow is the lesser of:
- 50% of your account balance minus your outstanding loan balances from all State-sponsored plans on the date of distribution; or
- $50,000 minus your highest outstanding loan balance(s) across all of your Savings Plus plans during the past 12 months.
The interest rate for the term of your loan is based on the prime rate published in the Wall Street Journal on the 15th day of each month prior to the first day of the month it applies plus 1%.
Documentation is not required for a general purpose loan, but documentation is required for a primary residence loan.
- Early Loan Payoff
- Manual Loan Repayment
- Self-Directed Brokerage Account
- Loan Modeling
- Medical Leave
- Military Leave
- Deemed Distribution of Loan Balances
You qualify for a loan from your Savings Plus 401(k) and/or 457 account if you're currently employed by the State of California and you have $5,000 or more in your account. You don't qualify if you're retired, working as a rehired annuitant, separated from employment, or obtained your account as a beneficiary or through a Qualified Domestic Relations Order.
You may have two outstanding loans from each plan at any given time, you may have two general purpose or one general purpose and one primary. However, the amount you borrow from one plan will affect the maximum amount you may borrow from the other plan. The loan amount is taken proportionately from all investments in your core account.
Automatic Payroll Deductions
Loan repayments are automatically deducted from your paycheck monthly after federal and state taxes are withheld. You pay principal and interest with each loan repayment. Your repayments are invested according to your current investment allocation. If no allocation is on file, the loan repayments are invested in the Short Term Investment Fund or other fund selected by Savings Plus. Loan repayments commence with the pay period following loan initiation. For example, if your loan is issued in December, your repayments start with the January pay period, check issued in the first part of February. If you are paid more than once a month, the deduction is taken from the final paycheck of the month.
You can repay your loan in full at any time without a prepayment penalty. Partial payments are not permitted and you must have at least 16 days remaining prior to your last scheduled repayment. To do this, you have two options to obtain payoff information:
Online: Log into your account on the Savings Plus website
Request to payoff your loan in full by requesting an Early Loan Payoff Invoice. The invoice will include two payoff amounts and two due dates to choose from.
By phone: Contact a Savings Plus Service Center representative
A Savings Plus Service Center representative will provide you an estimate of your full loan payoff and send you an Early Loan Payoff Invoice with the amount you owe, the payment address, and due date.
You may make manual loan repayments directly to the Savings Plus Service Center if you're on a leave of absence, disability, retired, or terminated. You can make a repayment by mailing your payment to the Savings Plus Service Center.
The following loan repayment methods are acceptable:
- Cashier's check
- Money order
- Certified check
Be sure to include your name and last 4 digits of your Social Security number on the check. Make your check payable to either Savings Plus 401(k) or Savings Plus 457, depending on which plan your loan is in.
Mail your repayment to:
Savings Plus Service Center
PO Box 563922
Charlotte, NC 28256
Or overnight your repayment to:
Savings Plus Service Center
7201 Hewitt Associates Drive
Charlotte, NC 28262
If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may borrow. However, you can't borrow directly from a brokerage account. If the amount you want to borrow includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the loan.
You may borrow from your 401(k) Plan and 457 Plan accounts if you're currently employed by the State of California. You don't qualify if you're retired, working as a rehired annuitant, separated from employment, 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:
- Online: Log into your account on the Savings Plus website
- By phone: Contact a Savings Plus Service Center representative
If you’re on an unpaid medical leave, Savings Plus will suspend your loan repayment schedule for up to 12 months of your unpaid medical leave.
When you return, your loan term will be extended by the period of time that you were on leave (not to exceed the legal limit). Your loan repayments will resume being deducted automatically from your paycheck soon after you return.
If you are still on an unpaid medical leave after 12 months, then you are no longer excluded from the delinquency process. You’ll be notified when you can start making manual loan repayments. If you do not make repayments, then your loan will go through the delinquency process.
Interest on your loan accumulates while your repayments are suspended. Thus, your loan repayment amount may increase.
Under the Uniformed Services Employment and Reemployment Rights Act of 1994, financial obligations of employees who separate from employment for military leave and who have an outstanding loan upon separation are handled in a special manner. For more information on military leave, contact a Savings Plus Service Center representative.
If you miss a loan repayment, it's considered delinquent and must be repaid within the cure period. Otherwise, the entire outstanding loan balance, including interest, is considered a taxable deemed distribution. This loan will remain on your account until either it's repaid in full, or you take a total distribution from your account.
If your employment ends for any reason, you may continue making monthly loan payments or repay your loan in full. If you do not repay the loan, it goes into default and is considered a distribution by the IRS. If the loan is taken from your 401(k) Plan account, the distribution may be considered an early withdrawal. If the loan is from your 457 Plan account, there is no tax penalty for an early withdrawal, unless your loan included any 401(k) Rollover balance. An IRS Form 1099-R will be issued by January 31 of the following year.
Savings Plus Service Center representatives do not give legal or tax advice. Contact your legal or tax advisor for such advice.