The plan is intended to help you put aside money for your retirement. However, State of Iowa, subject to your school district’s plan provisions, has included a plan feature that enables you to access money from the plan.
- The amount the plan can loan to you is limited by rules under the tax law. All loans will be limited to the lesser of: one-half of your vested account balance or $50,000.
- Loans can be taken from your salary deferrals only.
- The minimum loan amount is $1,000.
- All loans must generally be repaid within five years. A longer term may be available if the loan is to be used to purchase your principal residence.
- You can have one loan outstanding at a time.
- You pay interest back to your account. The interest rate on your loan will be the Prime rate plus 1.00%.
- A $50.00 processing fee for all new loans and a $30.00 per year maintenance fee are charged to your account.
Unpaid loan amounts will be taxed as ordinary income and may incur a 10% federal tax penalty if you are under age 59½.
Other requirements and limits must be met prior to borrowing money from your account. For additional information regarding loans, please see your financial advisor. Refer to the Summary Plan Description for more details about this participant loan feature.