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Texas Payroll/Personnel Resource

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Deferred Compensation Plans
Loan Repayment

401(k) Loan Repayment

State agency employees who receive a loan from the state’s 401(k) plan must repay the loan through payroll deduction.

Agencies are notified to start or stop an employee’s loan repayment deduction via electronic data transfer from ERS.

Loan repayment usually begins with the pay period after the loan was made. An agency must notify an employee if his or her salary does not support the loan repayment deduction.

State agencies should direct any employee inquiries concerning loan repayment to the 401(k) plan administrator.

457 Loan Repayment

State agency employees who receive a loan from the state’s 457 plan must repay the loan through payroll deduction.

Agencies are notified to start or stop an employee’s loan repayment deduction via electronic data transfer from ERS.

Loan repayment usually begins with the pay period after the loan was made. An agency must notify an employee if his or her salary does not support the loan repayment deduction.

State agencies should direct any employee inquiries concerning loan repayment to the 457 plan administrator.

Sources

Internal Revenue Code, Sections 401(a)(13)(A), (k); 72(p), 402(g)(1), (5); 457(a)-(e), (g); Texas Government Code, Sections 609.001(1)-(2), (5), (8), (10), (11), 609.007(b)-(c), 609.502(a)-(c); Texas Revised Civil Statutes, Article 6228a-5, Sections 1, 2(b); 34 Texas Administrative Code Section 87.5(a).