How to Borrow From Class 403(b) Shares

by Stephanie Ellen

A 403(b) plan is a type of annuity that invests in bonds and bond-like financial instruments. They are offered to state employees and employees of non-profit companies. They guarantee a fixed rate of return for when you retire, but just in case you can't wait until retirement for your money you can borrow against your investment. While you won't have to pay taxes on the loan, you will have to pay interest on any amount you borrow.

Contact your 403(b) plan administrator and ask if you can take a loan from your plan and then request a loan application. Not all plans allow loans and those that do may require you to meet certain conditions, such as hardship restrictions. The phone number for your plan administrator should be listed on your account statement.

Fill out the loan paperwork. The loan form will differ from plan to plan, but in general you'll need to provide identifying information like your name, address and social security number plus the amount you want to borrow.

Submit the paperwork to the address listed on the loan application.

Wait for the loan to be approved. A credit check will not be performed. However, you may have to wait several days for your loan to be processed.

Warning

  • If you fail to pay the loan, the IRS will treat the loan as a distribution and you'll be liable for taxes plus any early withdrawal penalties that are due.

Items you will need

  • Application form

About the Author

Stephanie Ellen teaches mathematics and statistics at the university and college level. She coauthored a statistics textbook published by Houghton-Mifflin. She has been writing professionally since 2008. Ellen holds a Bachelor of Science in health science from State University New York, a master's degree in math education from Jacksonville University and a Master of Arts in creative writing from National University.