Loans are available if you are eligible. If you are an active state employee or employee of a participating local government whose employer has adopted the loan program and you have accumulated a deferred compensation account
balance of $2,050 or more, you may apply for a loan.
You can borrow up to 50 percent of your account balance. However, the minimum loan available is $1,000 and the maximum amount is $50,000.
There are two types of loans:
General Purpose—The money may be used for any reason. You must pay the loan back within five years.
Residential—The money must be used to purchase a primary residence. Certain documentation is required. You must pay the loan back within 15 years.
There is a $50, one-time loan fee that will be deducted from your account at the time your loan is processed.
The interest rate is prime (as printed in the Wall Street Journal on the last business day of the prior month) plus 1 percent. The interest will be paid back to your account.
Loan repayments are made by payroll deduction on an after-tax basis.
While borrowing from your account sounds easy, keep in mind that OSGP was set up as a long-term savings vehicle to help you prepare for a financially secure retirement. Consider alternative ways to cover your expenses, and read the loan brochure before applying for a loan.
Any overpayments will be returned to you in the form of a check.