May I take out a loan against my PERF account?
No, PERF members may not currently borrow money from their pension or Annuity Savings Account.
Borrowing against personal retirement accounts is a relatively recent phenomenon. Loans against employer-sponsored 401(k) programs, Individual Retirement Accounts (IRAs), IRA Rollovers, etc. have become an accessible way for Americans to tap into their retirement savings ahead of time. However, as a member of PERF, it is important to understand that this does not extend to your PERF benefits.
While loans taken from future retirement funds may appear attractive at first glance, they may not be for everyone. On the surface, there are three enticing incentives to these types of loans:
- The loan is easy to qualify for;
- Loan repayment can be made over several years, and if used for the purchase of a home, the repayment period can be even longer; and,
- They appear to be a win-win proposition when considering interest on the loan is repaid to your retirement account.
However, these loans can cost more upon further review. You should consult with a financial advisor when considering this type of loan on other retirement accounts you may have.
