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11. What if I have a loan on my 457 account?

11. What if I have a loan on my 457 account?

If you took a loan on your 457 account that is not paid off yet, you have options: 

  • Continue to pay on it each month by sending Voya a check or through reverse ACH;
  • Pay the entire remaining balance by sending Voya a check for the payoff amount;
  • Pay it off with a distribution from your 457 account.  Keep in mind that if you elect to pay the loan off with a distribution from your 401(k) account, you will owe taxes on the distribution and you may be subject to a 10-percent IRS penalty for an early withdrawal.  Consult with a tax advisor to determine if the 10-percent penalty will apply to you.