Can You Borrow From a 403b Roth IRA?

Roth Individual Retirement Accounts and 403b plans offer tax advantages for retirement savings. However, the Internal Revenue Service limits when loans can be taken and how much can be borrowed from the accounts.

Roth IRAs

The IRS explicitly prohibits loans from being taken from a Roth IRA or even using a Roth IRA as collateral. If you take a loan from a Roth IRA, the account will not longer be treated as an IRA by the IRS.

403b Plans

The IRS permits 403b plan account holders to borrow up to $50,000 from the account. However, the loan cannot exceed 50 percent of your 401k plan value.

Warning

You must repay your 403b plan loan, with interest, over no more than five years. Any part of the loan that you do not repay will be treated as a distribution, subject to income taxes and early withdrawal penalties.

References

• IRS: Publication 590 (Chapter 2); Roth IRAs
• IRS: Retirement Plans FAQs regarding Loans