Can a participant borrow money from a qualified retirement plan?
Yes, provided the plan document contains a participant loan provision. The maximum amount that a participant may borrow from a plan is generally 50% of their vested account balance, but not more than $50,000. Loans must be charged a competitive interest rate (usually Prime Rate plus 1%). Loans must be repaid over a period, not to exceed five years, unless the loan is being used to purchase a primary residence. In that case, loans may be repaid over a longer period of time.
