The Cares Act Permitted Temporary Changes to Loans
Until September 23, 2020, the loan amount was temporarily increased to permit borrowing up to 100% of the participant's account balance or $100,000, whichever was less. Those with existing loans could request to pause repayment, however interest would still accrue in 2020 and the loan would be reamortized.
For plan loan information outside of the CARES Act, read on:
Participants may apply for an account reduction loan for general purposes, for up to a five (5) year term, of up to 50% of their account balance, subject to governing rules and not to exceed the regulated limit, currently $50,000.
Note that before taking an account-reduction loan from your retirement funds, advisors generally recommend carefully reviewing all other available options. It is widely recognized that individuals may encounter changing circumstances that negatively impact their ability to repay their loan timely. Defaulting on loan repayment is a taxable event. Participants may contact TIAA at 800-842-2829 with any questions about taking a loan from their UU retirement plan savings.
Purchase of Primary Residence
For purchase of a primary residence for the Participant, or to preclude foreclosure of the primary residence of the Participant, an account reduction loan with a term of up to ten (10) years is permissible, of up to 50% of a participant’s account, subject to applicable regulations, not to exceed $50,000. TIAA requires home purchase paperwork in order to review and process this type of loan.
For either the general-purpose or primary-residence-purchase account reduction loan, both principal and interest are paid back into the participant’s account. Repayment is accomplished via automated draft of the participant's bank account. Due to applicable federal regulations, a defaulted loan is a taxable event, with an additional penalty if the individual is under age 59½.
In order to initiate an Account reduction loan, apply online by logging in to your TIAA account. Currently, the application fee for a general purpose loan is $75, while the application fee for the primary residence loan is $125. The fee is deducted from the total amount of the loan. For example, if the general purpose loan amount requested is $5,000, the amount received will be $4,925.
Contact TIAA at (800) 842-2829. Ask to speak with a representative who is familiar with the UU Plan's loan provisions.