If you’re considering borrowing from your 401k Fidelity, there are a few things you should know. First, you can only take out one loan at a time. Second, the maximum amount you can borrow is 50% of your vested account balance, or $50,000, whichever is less. Third, you have to make payments on your loan every month. The interest rate on your loan will be the prime rate plus 1%. If you leave your job, you’ll have to pay back your loan in full within 60 days. If you don’t, the loan will be considered a distribution and you’ll have to pay taxes and penalties on the amount you borrowed.
Loan Eligibility Requirements
To qualify for a 401(k) loan from Fidelity, you must meet the following requirements:
- Be a participant in your employer’s 401(k) plan.
- Have at least three months’ worth of contributions to your 401(k) account.
- Not have any outstanding loans from your 401(k) account.
- Not have taken multiple loans from your 401(k) account in the past 12 months.
- Meet your employer’s specific loan eligibility requirements.
If you meet all of these requirements, you can apply for a 401(k) loan from Fidelity. The amount you can borrow will be limited by the following factors:
- Your plan’s loan limits.
- The amount of money you have in your 401(k) account.
- The amount of money you need to borrow.
| Loan Type | Loan Limit |
|---|---|
| General | 50% of your vested account balance, up to $50,000 |
| Primary Residence | Up to $100,000 |
If you meet the eligibility requirements and have sufficient funds in your account, you can apply for a 401(k) loan from Fidelity online, by phone, or by mail.
Loan Limits
The amount you can borrow from your 401k Fidelity account is limited to the lesser of:
- $50,000
- 50% of your vested account balance
Repayment Terms
401k Fidelity loans must be repaid within five years, except for loans used to purchase a primary residence, which can be repaid over 10 years. The minimum monthly payment is 1% of the original loan amount. You can make additional payments at any time.
If you fail to repay your loan on time, the outstanding balance will be considered a taxable distribution and you may be subject to a 10% early withdrawal penalty.
| Loan Amount | Repayment Term |
|---|---|
| Up to $10,000 | 5 years |
| $10,000 to $50,000 | 5 years (or 10 years for a primary residence loan) |
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How Many Loans Can You Take From Your 401k Fidelity
401(k) loans are a great way to access your retirement savings without having to pay taxes or penalties. However, it’s important to understand the rules and consequences before you take a loan from your 401(k).
With Fidelity, you can take up to two outstanding loans at any one time. Each loan can be for up to $50,000, or 50% of your vested account balance, whichever is less. You must repay the loan within five years, unless you use the money to buy a primary residence, in which case you have up to ten years to repay the loan.
Consequences of Loan Default
- If you default on your 401(k) loan, the outstanding loan balance will be considered a distribution from your 401(k) and will be subject to ordinary income tax.
- If you are under age 59½, you will also have to pay a 10% early withdrawal penalty.
- In addition, your employer may be required to withhold federal and state income taxes from the loan proceeds.
Here is a table summarizing the key features of 401(k) loans from Fidelity:
| Feature | Fidelity 401(k) Loans |
|---|---|
| Maximum loan amount | $50,000, or 50% of vested account balance, whichever is less |
| Loan term | 5 years (10 years for home purchases) |
| Interest rate | Prime Rate plus 1% |
| Loan fees | $50 origination fee |
| Repayment | Made through payroll deductions |
| Consequences of default | Loan balance is considered a distribution and is subject to ordinary income tax and a 10% early withdrawal penalty if under age 59½ |
Thanks for sticking with me through this deep dive into 401k loans from Fidelity. I know it can be a bit of a snoozefest, but understanding your options is crucial for making informed financial decisions. Remember, borrowing from your retirement savings should be a carefully considered last resort.
Before you hit the submit button, make sure you’re crystal clear on the terms and conditions, including the interest rates, repayment schedule, and potential penalties. And if you still have questions, don’t hesitate to reach out to Fidelity or an independent financial advisor.
By the way, don’t be a stranger! Drop by again soon for more insights and tips on managing your finances like a boss. Until next time, keep your money goals on track and enjoy the journey. Cheers!