Yes. If you are married at the time you request the loan, your spouse must consent to the loan. The loan will be administered by the applicable fund sponsor. Specific loan provisions for each fund sponsor are described below:
- If your fund sponsors are TIAA and CREF:
How much you can borrow from TIAA. Generally, the minimum loan amount is $1,000, and the maximum loan amount is $50,000. The maximum amount you can borrow may be less, however, depending on two factors: 1) the amount of your GSRA accumulation, and 2) whether you have had any other loans from any of this Institution's plans within the last year.
If you have not had a plan loan in the previous year, your maximum loan is the least of: 1) $50,000; or 2) 45 percent of your combined TIAA and CREF GSRA accumulation attributable to participation under this Plan; or 3) 90 percent of your TIAA and the TIAA Real Estate Account GSRA Traditional Annuity accumulation attributable to participation under this Plan.
If you have had another loan from any plan of this Institution within the last year, the maximum you can borrow will be reduced by that amount. Also, if more than one employer contributed to your Annuities, you can only take loans against the amount you accumulated under this Institution's Plan. You should check with your other employers for their rules on loans.
Securing your loan: You have to set aside an amount equal to 110 percent of your loan in your TIAA GSRA Traditional Annuity accumulation as security for your loan. The security will continue to earn guaranteed interest as well as dividends. You cannot make a cash withdrawal or begin retirement income from the funds that serve as security for your loan. But as you repay your loan, the amount reserved as security decreases, and more of your accumulation becomes available to you for withdrawal and retirement income.
If you die before repaying your loan, the remaining loan balance will be repaid from the TIAA Traditional Annuity accumulation set aside as security. Your beneficiaries would receive the balance of your accumulation.
Determining the interest rate: The loan interest rate is variable and can increase or decrease every three months. The interest rate you pay initially will be the higher of 1) the Moody's Corporate Bond Yield Average for the calendar month ending two months before your loan is issued; or 2) the interest rate credited before your annuity starting date, as stated in the applicable rate schedule, plus 1 percent. Thereafter, the rate may change quarterly, but only if the new rate differs from your current rate by at least 1/2 percent.
Repayment: You have from one to five years to repay your loan. There's one exception: if you use the loan solely to purchase your primary residence, you can take up to ten years to repay. The term of the loan usually cannot extend past the April 1st of the year after the year you attain age 70 1/2.
Your first payment will be due the first day of the third month after your loan is issued, and every three months thereafter. You can repay your loan early with no penalties. You can also make partial prepayments any time. If you do, whatever you prepay will be applied directly to the principal amount of your loan. (Regularly scheduled payments are applied first to interest, then to principal.) Any prepayments will reduce the amount of future repayments, not the number of payments.
TIAA offers a free automatic loan repayment service. Your bank will debit your checking account and send your repayment to TIAA on the date it is due. If you prefer to repay your loan directly, TIAA will send you a bill every three months, at least ten days before the payment is due.
Defaults: If TIAA does not receive your loan repayment by the last day of the month it is due, you will be in default. Currently, it appears that the amount in default will be the missed payment plus all interest accrued to date. However, it is possible that your entire loan balance will be considered in default if you miss one payment.
To the extent permitted by federal tax law, TIAA will deduct the amount in default from the collateral held in the TIAA GSRA Traditional Annuity and apply it toward repaying the loan. It is very important to keep in mind, however, that the IRS requires TIAA to report the default amount as income you actually received. That means defaults are taxable as ordinary income in the year they occur. If you are under age 59 1/2, your default may also be subject to an additional 10 percent federal tax penalty. TIAA assumes no responsibility for the tax consequences resulting from loan defaults.
Tax law may prohibit TIAA from deducting the default amount from your accumulation until you reach age 59 1/2, terminate employment, become disabled, or die, whichever occurs first. In these cases, you will be taxed on the default amount as if you received it as income in the year the default occurred. Interest accrues on the total amount in default and you are taxed on this interest each year until TIAA is able to deduct the defaulted amount from your accumulation to repay the loan.
To apply for a loan or for more information. To apply for a loan or to get answers to any questions you may have about loans, call TIAA-CREF's Telephone Counseling Center toll-free at 1-800-842-2776.
- Other Fund Sponsor: Scudder, Stevens & Clark