Loans from Your Supplemental 401(k)

Loans from Your Supplemental 401(k)

You are eligible to borrow money from your 401(k) account if your balance is greater than $2,000. Please see below for more information about loans. A loan takes approximately 3-4 weeks to process.

Important! Only pre-tax contributions are available to borrow. Roth post-tax contributions are not available.

What You Should Know

  • You are allowed a maximum of one loan at a time. 
  • You must pay interest on the loan.
  • You must make your loan payments directly to Fidelity Investments. Loan payments cannot be automatically deducted from your MIT paycheck.

Contact Fidelity Investments for details by calling (877) MIT-SAVE or (877) 648-7283 or visit Fidelity NetBenefits. TTY service is available for the speech and hearing impaired at (800) 259-9743.

What You Can Borrow

Tax laws limit the amount you can borrow from your 401(k) account. Typically, you can borrow up to 50% of your account balance up to a maximum loan of $50,000. The minimum amount you can borrow is $1,000.

Additional stipulations:

  • If you borrowed from your 401(k) account within the last 12 months, the maximum you can borrow may be less than $50,000.
  • The money you borrow comes directly from your 401(k) account and is taken proportionally from all eligible investment funds in your account.
  • You cannot have more than one loan at a time from your 401(k) account, so you must repay any existing loan on the account before you borrow from it again.
  • Your 401(k) loan cannot be refinanced or re-amortized.

How Much it Will Cost to Borrow

The interest on your 401(k) loan:

  • is equal to the Prime Rate published in The Wall Street Journal on the first business day of the calendar quarter in which your loan is approved,
  • stays the same throughout the term of your loan, and
  • is not tax-deductible

You pay no application fees, maintenance fees, or any other fees when you borrow from your 401(k) account, and you pay no taxes or penalties on your loan if you repay it on time.

Failure to Repay (Defaulting on Your Loan)

If you do not repay your loan on time:

  • Your loan is treated as a withdrawal and you must pay current income taxes on the amount of the loan.
  • You may have to pay additional penalties if you are under the age of 59½.
  • You will not be able to take another loan from the 401(k) Plan.

How You Receive Your Loan

You can initiate a loan request or get additional details by calling a Fidelity Investments Retirement Services Specialist toll-free at (877) MIT-SAVE or (877) 648-7283. TTY service for the speech and hearing impaired is available by calling (800) 259-9743. Retirement Services Specialists are available Monday through Friday, 8 a.m. to midnight ET.

You can also get loan information and calculate the cost of the loan you are considering by visiting FidelityNetBenefits.