After you enroll and start contributing to the Adventist HealthCare Retirement Plan (AHRP), you can take money out of your account through a loan or withdrawal.
There are rules that apply to how and when you can take the money out of your account. Below is an overview of loans and withdrawals and how they work. For details, see Frequently Asked Questions – Taking a Loan or the Summary Plan Description.
To make a request, log on to your account, view the Savings and Investment menu and chose the “Loans” or “Withdraw or Rollover Money” link.
When You’re Eligible to Take a Loan
If you have a vested AHRP balance of $2,050 or more, you may take up to two loans from each plan (the 401(a) and 403(b) Plans) for a maximum of 4 loans total. This includes anyone who has contributed to the AHRP because you’re always 100% vested in your own contributions.
Amount You Can Borrow
You can borrow from $1,000 up to 50% of your vested balanceor $50,000, whichever is less. However, the amount available is reduced by your highest loan balance during the past 12 months.
Types of Loans Available
There are two types of loans available:
- General Purpose—a loan that is used for major expenses such as a medical emergency.
- Primary Residence—a loan used to purchase a place where you will live most of the time.
Costs of Taking a Loan
There are several costs of taking a loan. They include:
- Interest on the amount of the loan
- Fees ($50 for a general purpose loan and $75 for a primary residence loan)
- The possibility of lower investment earnings
Because these costs may be significant, it’s important to consider other sources of money before you borrow from your AHRP account.
Repaying the Loan
To repay the loan, after-tax money is deducted from your bank account each pay period or you must submit a check each month.
Keep in mind that if you leave your employer and still have a loan balance, you’ll need to continue making repayments. If you stop making repayments, the outstanding balance becomes taxable income and if you’re under age 59-1/2 you’ll pay an early withdrawal tax penalty.
You may be able to withdraw money from your AHRP account in the following situations:
- Employment ends—you leave your employer to retire or for other reasons.
- In-service withdrawal—you are actively employed by an AHRP participating employer
- Financial hardship—the reason for the withdrawal meets IRS requirements and you can provide proof that you have no other financial resources to meet your need.
However, if you withdraw the money and don’t invest it in another plan or individual retirement account, the cost to you may be significant. You could lose the opportunity to continue to grow your savings or owe taxes on the withdrawal amount.
When your employment with an AHRP participating employer ends, you have several options if you have a vested balance of $1,000 or more:
- Leave the money in the AHRP. You don’t need to start withdrawing minimum amounts until you reach age 70-1/2.
- Roll over the balance. You can move the money into another employer’s retirement plan (if the plan meets certain eligibility requirements) or to an individual retirement account (IRA).
- Withdraw the money. You receive your balance as cash but must pay income taxes on the amount. 20% of your balance is automatically withheld to help cover your taxes.
If your vested balance is less than $1,000, you can roll over the balance to another qualified plan or individual retirement account (IRA). If you don’t choose to roll over a balance that is less than $1,000, you’ll receive a taxable cash payment automatically.
When you reach age 59-1/2, you can withdraw all or any portion of your vested account balance without paying a penalty. However, you must pay income taxes on the amount in the year you make the withdrawal.
If you’re under age 59-1/2 and eligible to withdraw money from your AHRP account due to a financial hardship, you’ll probably pay a 10% tax penalty. However, the penalty doesn’t apply if you’re permanently disabled. You must also pay income taxes on the hardship withdrawal amount in the year you receive it.
Financial emergencies that qualify as reasons for hardship withdrawals include:
- Medical expenses for yourself or an immediate family member;
- Purchase of your primary residence (excluding mortgage payments);
- Prevention of eviction from your home or foreclosure on your home mortgage;
- Post-secondary education expenses for yourself or an immediate family member;
- Funeral expenses; and
- Principal residence repairs limited to those that can be deducted on your tax return under the casualty provisions.