Text Size A A A
457(b) Withdrawals & Loans

When can money be withdrawn from my plan account?

Money can be withdrawn from the plan in these events:

Death.      

Disability.

Severance from employment. 

Retirement. 

Unforeseeable emergency as determined by Kansas City, Kansas Public Schools under the Internal Revenue Code.

Attainment of age 70½. (If you reach age 70½ and have not separated from service, you can elect to defer receipt no later than April 1 of the year following separation from service.)

A one-time withdrawal is allowed if your account balance is $5,000 or less and there have been no deferrals for the past two years and no prior withdrawals of this type have been taken.

Income taxes are payable upon withdrawal and a 10% tax penalty may apply to early withdrawals of rollovers received from other types of plans or IRAs.

Can I borrow money from my account?

The plan is intended to help you put aside money for your retirement. However, Kansas City, Kansas Public Schools has included a plan feature that enables you to access money from the plan.

The amount the plan can loan to you is limited by rules under the tax law. All loans will be limited to the lesser of: one-half of your vested account balance or $50,000.  

Loans can be taken from your salary deferrals only.   

The minimum loan amount is $1,000.   

All loans must generally be repaid within five years. A longer term may be available if the loan is to be used to purchase your principal residence.   

You can have one loan outstanding at a time.    

You pay interest back to your account. The interest rate on your loan will be the Prime Rate plus 1%.     

A $50.00 processing fee for all new loans and a $30.00 per year maintenance fee are charged to your account.      

Defaulted loan amounts (not repaid on time) are taxed as ordinary income and a 10% tax penalty may apply to early withdrawals of rollovers received from other types of plans or IRAs .

Other requirements and limits must be met prior to borrowing money from your account. For additional information regarding loans, please see your financial advisor.