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Loans & Hardship Withdrawals

While working for a YMCA, participants may not withdraw any money from their Retirement Account(s).

Loans- Best Practices

Loans sidebar

  • A participant may borrow from their accounts in the Savings Plan—the 403(b) Smart Account and the Rollover Account. 

  • The maximum amount they may borrow is 50% of their total account balances in the Savings Plan, or $50,000, whichever is less. The minimum amount they can borrow is $1,000.
  • Only one loan can be taken at a time. Once a loan is paid off, the participant can take a new loan.

For a full list of rules, see Loans.

Managing Loan Repayments

  • Once an employee has been approved for a loan, the Fund will notify you via email indicating the loan terms.

  • Loan repayment is done via a post-tax deduction and is taken directly from payroll. If an employee does not have enough money in their paycheck to cover the loan payment, the Fund will accept a direct payment in the form of a check.

  • After each pay date, it’s important to remit loans payments as soon as possible. If a loan payment is not received within 90 days of its due date, the loan will go into default.

  • If the loan defaults, the loan balance (including the amount that was already withheld from their check and not transmitted to the Fund via YERDI) is a deemed distribution, which is treated as taxable income for the employee.

  • The employee can still pay off the loan after default, but will also have to pay phantom interest. A loan payoff after default does not reverse the taxable distribution, but will return the borrowed funds to the employee’s 403(b) Smart Account and/or Rollover Account to use for retirement. It will also allow them to take out a new loan. They will not be able to take out another loan until their defaulted loan is paid in full.

  • For an employee who turns 59 ½, terminates or passes away, whichever comes first, the Savings Plan balance is automatically reduced by the unpaid loan. Any portion of a loan originating from rollover money is also automatically removed from the balance upon default. After any of these situations occurs, the defaulted loan can no longer be paid back.


An employed participant who has made tax-deferred contributions to the 403(b) Smart Account may withdraw these contributions if they have a financial hardship.

Participants will no longer be required to take a loan from the Savings Plan before they can apply for a hardship withdrawal. However, they will be required to take a withdrawal of any other retirement, savings and welfare benefits sponsors by the Y including their Rollover Account and After-tax Account, if applicable, before being eligible for a hardship withdrawal.​

Participants will no longer be required to suspend contributions into the 403(b) Smart account for six months. They will be permitted to continue contributing to the 403(b) Smart Account when they take a hardship withdrawal. All participants who were subject to this suspension, will receive a letter from the Fund notifying them that they can restart contributions effective 1/1/2020.

Participants will no longer be required to submit supporting documentation of their hardship to the YMCA Retirement Fund. However, they will be required to certify that they have insufficient cash or other liquid assets to satisfy the financial need, meet the federal hardship requirements, agree to keep adequate supporting documentation of their financial needs, and provide such documentation to the Fund or IRS upon request.    

The qualifying rules to take a hardship withdrawal have been modified to the following:

  • Medical Care: Expenses not covered by health insurance that were incurred or are expected to be incurred to obtain medical care for the participant, their spouse, tax dependents or their designated primary beneficiary under the Plan, and are deductible under Internal Revenue Code Section 213(d), without regard to whether the expenses exceed the applicable percentage of adjusted gross income in that section.

  • Purchase of Principal Residence: Costs directly related to the purchase of the participant’s principal residence, excluding mortgage payments.

  • Educational Expenses: Expenses of tuition, related educational fees, and room and board expenses, for up to the next twelve months of post-secondary education for the participant, his or her spouse, children, tax dependents or designated primary beneficiary under the Plan.

  • Eviction: Payment necessary to prevent the eviction of the participant from his or her principal residence or foreclosure on the mortgage on the participant’s principal residence.

  • Funeral and Burial Expenses: Expenses for the burial and funeral expenses for the participant’s deceased parent, spouse, children, tax dependents or designated primary beneficiary under the Plan.

  • Repairs for Damage to Principal Residence: Expenses for the repair of damage to the participant’s principal residence that would qualify for a casualty deduction under Internal Revenue Code Section 165 (determined without regard to whether the damage was a result of a federally declared disaster or the loss exceeds 10% of the participant’s gross income).

  • FEMA Declared Disaster Expense: Expenses incurred by a participant who, at the time of a FEMA-declared disaster, had a principal residence or principal place of employment located in an area designated by FEMA for individual assistance, and the expenses were result of that disaster.

  1. The employee requests hardship withdrawal forms from the Fund.

  2. Once the employee has completed and sent back the forms, the Fund can process the hardship withdrawal and mail them a check.