Loans and distributions
Although the RSP is designed for long-term savings, you can borrow from your account and, in some circumstances, take an in-service withdrawal.
You can borrow up to 50% from the 401(k) sources in your RSP account (employee deferrals, rollovers, and matching contributions). You cannot borrow from your retirement plan contribution sources. The minimum loan amount is $1,000 and the maximum loan amount is $50,000, reduced by any outstanding loan balance during the previous twelve months. You can take one new loan per calendar year, and have two loans outstanding. Only one of these outstanding loans may be for a principal residence. Loans can be repaid over a period of up to five years, or 30 years if the loan is taken to purchase your principal residence.
You will pay a $40 application fee if you apply for your loan online or through the VOICE® Network, or a $90 application fee if you apply by phone with personal assistance from a Vanguard associate. You will also pay a $25 annual account maintenance fee, withheld from your account.
To request a new loan, pay off an outstanding loan, or take an in-service distribution, log on to vanguard.com/retirementplans, click Manage my money, and select Manage my loans and withdrawals. If you have multiple accounts at Vanguard, you'll first need to select Employer plans.
You can withdraw money from your RSP accounts in the following situations while you are employed:
- Rollover withdrawal. You can withdraw at any time all or part of any assets you rolled over from another plan.
- Age 59½ withdrawal. Once you reach age 59½, you can receive withdrawals from your vested account balance, except for retirement plan contributions and the pre-2004 Retirement Plan portions of your account.
- Age 65 withdrawal. Once you reach age 65, you can receive withdrawals from your entire vested account balance, including retirement plan contributions and the pre-2004 retirement plan portions of your account.
- Hardship withdrawals. You can withdraw employee pre-tax, Roth, and catch-up contributions from your account for a financial hardship as defined by the plan—but only once in any twelve-month period. Before making a hardship withdrawal, you must first exhaust other options, including after-tax and rollover withdrawals, as well as loans. In addition, you cannot contribute to your RSP account for six months after the hardship withdrawal.
- After-tax withdrawal. Applies to crew members with pre-1988 after-tax assets only. You can withdraw all or part of your traditional after-tax contributions (but not Roth after-tax contributions) at any time. Investment earnings on after-tax contributions are taxable upon withdrawal.
You are eligible to receive your vested account balance upon termination of employment, or total and permanent disability. Depending on your balance, you may be able to leave it in the plan (with required distributions beginning at age 70½), or you can:
- Receive it as a lump-sum cash payment.
- Roll your plan balance over to another employer's eligible plan or an IRA.
- Receive it in monthly, quarterly, or annual installments either (i) for a fixed period based on your life expectancy or (ii) in a fixed dollar amount for a period up to 20 years. If you are age 55 or older, you can also take installments through the Vanguard Managed Account Program as part of the Income+ feature.
- Take partial withdrawals at your discretion.
Note: Participants on total and permanent disability are not eligible for installments or partial withdrawal payments.
You are responsible for paying any applicable federal, state, local, or foreign taxes on a withdrawal or payment from pre-tax accounts. A withdrawal or payment that includes earnings on Roth contributions is also taxable unless the initial Roth contribution was made more than five years ago and you are at least age 59½. Early withdrawals and payments may be subject to a 10% federal penalty tax. To the extent required by law, Vanguard will make the appropriate withholding for tax purposes.