How to Get a Pension Loan

State employee completes a pension loan application.

Getting a pension loan is an easy way for an employee to borrow money against their vested contribution. A pension plan is a retirement plan that is sponsored by an employer for the purpose of providing retirement income to employees. The most common type of pension plan is a defined benefit plan, which provides retirees with guaranteed lifetime payments. An employee who borrows against their pension is essentially borrowing their own retirement money and in most cases the proceeds of the loan are treated as a distribution which you do not have to claim on your income taxes unless you go into default.


Step 1

Contact your employer's human resources office to inquiry if your employer's pension plan offers pension loans to vested employees. New employees who are not yet vested in the pension plan may not qualify for a pension loan.

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Step 2

Request an application for a pension loan. Identify if the loan is a paper-based loan application, an online loan application or an application that must be completed over the phone. Some plans require you complete the application online or over the phone.


Step 3

Complete the pension loan application. You will need to specify the amount and duration of the loan in your application. Most pension loans have a fifty thousand dollar maximum limit but vary in terms of the maximum amount of time you have to pay off the loan. Check with your pension loan administration for the maximum loan amount you can receive and the maximum amount of time you have to pay off the loan.

Step 4

Submit your pension loan application.


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