How Do I Apply for a Loan?

If you have unexpected expenses arise and participate in the County of San Diego 401(a) Plan, you may apply for a loan from your retirement account. The loan process is very similar to that of your bank or credit union. A Retirement Specialist can talk to you about the details and how to apply.

How much can I qualify for?

Loans range from $1,000 to 50% of your vested account balance, up to a maximum of $50,000. To find out how much you may qualify for, contact us.

How soon do I have to pay it back? 

The maximum term for a general purpose loan is 5 years from the date you receive the loan amount. The term for a loan to purchase a primary residence is 10 years. Loan repayments consist of principal and interest, and they’ll be automatically deducted from each paycheck with after-tax dollars.

You may only have one outstanding loan at any time and you’ll have to pay off any old loans before taking a new one. If you separate from service, you have 60 days to repay the loan or the loan distribution becomes a taxable event. Distributions made prior to 59½ may be subject to a 10% penalty tax. All taxable distributions at any age are subject to ordinary income tax, and surrender charges may apply.

What are the tax consequences?

The amount you borrow does not constitute a taxable distribution. But if you don’t repay your loan when payments are due, the unpaid balance of principal and interest will be treated as a taxable distribution.

If you are on medical leave, your loan repayments may be suspended for up to one year. If you are on military leave, you may suspend loan repayments during the entire period of your military service. Your loan cannot be suspended while you're earning a paycheck from the County.

If you are not on medical or military leave, your loan will be deemed and becomes a taxable event after 60 days. Call Nationwide® for your payoff balance and where to send your payment. Neither Nationwide nor our representatives offer tax or legal advice. Consult your own counsel before making any decisions.

What are the pros and cons?

There are both advantages and disadvantages to taking a loan against your account balance. Weigh these points carefully before making your decision.


  • No credit check
  • Loans aren't taxed unless you default on the loan or have exceeded the loan limits
  • Competitive interest rates are paid back to your plan account instead of to a conventional lender
  • Loan repayments are invested in your plan account funding selections
  • Reasonable repayment terms


  • Loan are paid with after-tax dollars
  • Loans must be repaid with interest
  • A defaulted loan is considered a distribution, and is subject to tax reporting and income taxes
  • You may lose the benefits of compounding interest over time
  • Could affect your ability to qualify for loans outside the retirement plan

Get the help you need

Talk to a Retirement Specialist if you have questions about the loan program.

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