A loan is a temporary means of gaining access to the funds in your TDA account. Some participants will have emergency situations in which a loan may be necessary. Tax laws permit loans, provided certain restrictions are met. Therefore, it is necessary for the participant to analyze the provisions and charges associated with loans carefully.
Restrictions set forth by individual companies are varied.
Many companies place limits on the minimum amount that may be borrowed, or the minimum amount that must remain in the account after a loan has been taken. Some companies may activate additional charges once a loan is taken and may charge interest on the amount of the loan outstanding. In addition, many companies will not permit the creation of a second loan until after the repayment of the first loan. All rights reserved.