Can I Borrow Against My Pension?

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It happens to many of us. You have a big expense coming up – perhaps a home purchase, wedding, or sending a child off to college – and while considering your financial options you wonder, “Can I borrow against my ASRS account?” 

While it seems an easy and popular solution with upwards of one-third of Americans borrowing against their future retirement savings accounts, with regards to pensions, including the ASRS, borrowing is not an option. 

There are many different types of retirement plans, all of which are structured uniquely and must follow different guidelines under the Internal Revenue Service (IRS). The ASRS plan type is a 401(a) defined benefit plan which does not allow for loans against the fund’s balance. IRS regulations do not provide allowances for borrowing against your retirement such as you might be able to with other plan types. Some other plan types, such as 401(k) or 457 deferred compensation plans, do allow for account holders to borrow against the balances. Terms differ from plan to plan, so be sure to read the fine print and check with your plan administrator.

Naturally, your next question is likely, “Well, when can I access my money?” The two times you can request your funds are:

1.)  Terminating ASRS employment. If you are no longer working for an ASRS employer, you can request a refund of your funds. Termination of employment and withdrawal of funds offers three distribution options: 100% direct payment to yourself; 100% rollover into another qualified retirement plan; or a combination direct payment and rollover. Of course, refunding is not a requirement upon termination; in fact, it may be advantageous to leave your funds on account. Learn more about Leaving ASRS Employment.

2.) At retirement. When you reach retirement eligibility, you can take an annuity payment which will be paid to you each month for the remainder of your lifetime. The ASRS offers a variety of annuity options to meet our members’ varying needs and elections. Once made, these elections are irrevocable so careful thought should be given to what suits your needs both at retirement and in the foreseeable future. Learn more about Retirement Eligibility & Annuity Options.

Always think carefully before borrowing against your future. Nearly half of those who have taken loans against their eligible retirement plans later indicated they regretted it, stating that their quick solution to an immediate financial challenge “undermined” their long-term savings goals. Don’t let short-sightedness hurt your long-term.

To learn more about other savings plan options which may be available to you, check out “Savings Options” also found in this issue of Expanding Your Financial Horizons.


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This article appeared in "Expanding Your Financial Horizons" (October 2018), a digital publication of the ASRS.

By Pamela Foust, Strategic Communications


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