Beginning July 1, 2011, loans are available to participants in the City’s 457(b) Plans through the two plan administrators, NRS (Nationwide Retirement Solutions) and the ICMA-RC (International City Management Association Retirement Corporation).
These City-sponsored deferred compensation plans are pre-tax, retirement programs that are entirely funded through employee payroll contributions with no City funding. There are currently more than 1,000 City employees that contribute pre-tax dollars to individual retirement funds under these group 457(b) plans.
Loans will now become the primary way for 457(b) participants to access their funds prior to retirement without a penalty. Previously the only way participants were able to access funds prior to retirement was to qualify for a hardship withdrawal.
Participants are advised to carefully consider taking out a loan since it could have a significant impact on the ability to retire with sufficient funds.
City 457(b) Loan Provisions for NRS and ICMA-RC
Amount
Borrow up to $50,000 or 50% of your balance.
Repayment
Over 5 years or up to 30 years for primary residence through equal, monthly, after-tax ACH debits from your bank account (loan repayments will not be made from your payroll check).
Loan Check
Issued within two business days following submission of all documentation.
Interest Rate
Paid back to your account (you pay yourself) and the rates vary by plan (prime + 0.5% or FHA/VA for ICMA-RC or prime + 1% for NRS).
Cost
$50 (NRS) or $75 (ICMA-RC) fee up-front and annually.
Frequency
One loan at a time
Default
Repayments that are over 90-days overdue are reported to the IRS and become a taxable event that are subject to 20% federal withholding taxes.
Application
Call the toll-free numbers or for ICMA-RC go online using your account number.
ICMA-RC
1-800-669-7400 or go to www.icmarc.org using the City's 457(b) account #300969
NRS
1-877-677-3678 (for general information about their 457 plans, go to www.nationwide.com/457-retirement-plans.jsp)
For further information about loans contact ICMA-RC or NRS or contact the Benefits Office at 954-828-5160.
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