Loan From your 403(b) - Part Two

You chose to take a loan from your employer-sponsored retirement plan (403(b), 401(k)).  You have received and cashed the loan check. Here are a few important items I want to reiterate:


By endorsing and cashing the loan check you have agreed to the terms of the loan.

  • Loan repayments are made via personal check/personal payment. Repayments are not made via payroll deduction.

Loan Defaults

Missing a loan payment, you risk defaulting on your loan which could have a negative impact on your finances, both short and long term. If you default on your loan, the outstanding loan balance will be treated as an early withdrawal, subject to ordinary income taxes and the IRS 10% early withdrawal penalty. 

The plan (your employer) will not authorize a future loan if you have defaulted on a loan.  Think of it as “one-and-done” if a default happens.


403(b) loan repayments are made directly to Empower. If you are concerned about your payment schedule contact Empower directly at 1-866-467-7756.

Disclosure:  This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice.  If you are seeding investment advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.