By Genevieve McBride, ASRS Member Advisory Center Supervisor
One of most frequently asked questions received by the Member Advisory Center is “Can I take a loan out of my retirement?”
The answer, in a word, is "no”. Neither actively contributing members or inactive members with an account on file are permitted to take a loan from their account. The ASRS does not permit members to take loans from their account because it is not authorized in state statute. Absent authorizing legislation, the ASRS cannot permit members to borrow from their account. Inactive members may withdraw their funds and terminate membership. Active members may have access to loans from other types of retirement savings, such as a 401(k) or voluntary deferred compensation plans, such as those offered through the ASRS supplemental savings plans.
While these are your contributions, and you do have a right to them, there are only two times members can access to their funds. First, if you retire and take a monthly benefit or, if eligible, a lump sum retirement payment. Second, if you request a refund of contributions after terminating employment with any ASRS employer.
The next most frequently asked question is, “So, what if I terminate employment? Can I take a portion of it and leave some in ASRS?” Again, the answer is "no". You can either withdraw all of your contributions and terminate membership, or leave all your monies on account and retain your membership rights as an inactive member with access to future benefits.
If you do choose to terminate employment and withdraw your funds, you have three distribution options: 100% direct payment to yourself; 100% rollover into another qualified retirement plan; or a combination direct payment and rollover.
It is very important, even in difficult economic times, to give serious consideration when withdrawing your funds - especially if you have not reached retirement eligibility. Keep in mind that when you withdraw your contributions, you cancel your years of service in the ASRS and forfeit your rights to a future retirement benefit. Depending on your years of service, it may be a small benefit paid in a one-time lump sum, but as an ASRS retiree, you retain your rights to enroll in the ASRS’ retiree group health insurance, another valuable benefit to consider.
Learn more about Refunding Your Account and Terminating Membership.
Learn more about Retirement Eligibility.
HAVE A QUESTION WE CAN ANSWER?
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This article appeared in "Expanding Your Financial Horizons" (Q2-2016), a digital publication of the ASRS.
