MMC Benefits Handbook
Comparison with Withdrawals
The consequences of borrowing from your MMA 401(k) Savings & Investment Plan account differ from withdrawals in the ways listed below.
  • You pay no income taxes on the amount you receive as a loan.
  • You pay no additional taxes on the loan, regardless of your age if you continue your repayments on time. In contrast, if you make a withdrawal from the Plan when you are under age 59-1/2, you usually must pay a 10% Federal early withdrawal tax on the taxable amount withdrawn in addition to ordinary income taxes.
  • When you repay the loan, both the principal and interest are returned to your Plan account.
  • A loan deemed distributed will be treated as an outstanding loan when determining the number of loans you have outstanding and amount available for a loan.
  • Taking a loan may affect your tax treatment when you leave the Company if you are planning to take an in-kind distribution of Marsh & McLennan Companies stock.
  • Plan loan interest that you pay is not tax deductible.
  • Loan proceeds are not eligible for rollover.
  • Loans may not exceed $50,000 (loans outstanding over the prior 12 months will be added back to determine whether this limit has been exceeded) or 50% of the vested value of your Plan account, whichever is less.
  • You can only repay your loan on an after-tax basis. The amount of the loan and interest that you pay on your loan (and that is credited to your account) may not be tax-deductible and will be taxable to you when it is later distributed from the Plan; except to the extent the distribution includes your after-tax contributions. (You may want to consult with a tax professional.)
  • You must continue to make loan repayments during a leave of absence, although special rules apply if you are on military leave.
  • If you terminate employment with an outstanding loan balance, any outstanding loan balance that is not repaid will be in default. You may voluntarily pay off the entire unpaid principal balance of the loan, and all interest owing thereon, either: (i) in the form of a lump sum payment upon your termination of employment in a single certified check or money order or (ii) in periodic payments, via Automated Clearing House (ACH), with such periodic payments to be made in accordance with the current loan repayment schedule and completed no later than the original due date of the loan. Alternative (ii) is available only if you leave your entire account balance in the Plan during the repayment period.
  • The Internal Revenue Service requires that a default be declared no later than the last business day of the calendar quarter following the calendar quarter in which your first missed payment was due. If you do not repay your loan(s), the outstanding loan balance, plus accrued interest, may be treated as a taxable distribution from your account reducing your vested account balance by the outstanding loan amount with the outstanding loan amount (plus accrued interest) being subject to income tax including an additional 10% Federal early withdrawal tax if you are under age 59-1/2 unless an Internal Revenue Service exception applies to you.
  • If your loan is deemed distributed due to non-payment, you will be liable for all taxes when you file your tax return. (You may want to consult with a tax professional.)