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Prudential Loan

Prudential Loans

Prudential Annuity Loan Process

Follow these three steps to apply for a loan against your Prudential annuity:

  1. Determine the amount you would like to borrow from your annuity.
  2. Fill out and submit a Loan Application to your employer for approval.
  3. If your application is approved by your employer, either you or your employer will forward it to Prudential for processing.

Prudential Overview

Founded in 1875, Prudential Financial, Inc. is a financial services company that provides, among other things, investment management, insurance, annuities, structured settlements, mutual funds, and pensions. Prudential offers products and services to individual and institutional customers in the United States, Asia, Europe, and Latin America. Prudential has hundreds of subsidiary companies and holds over $2 trillion of life insurance.

Loan Basics

For Prudential customers who have their annuity through their employer, Prudential requires that the loan application be approved by the employer’s human resources department. Once the “Your Plan Authorization” section of the application has been completed by the benefits/human resources office, the application may then be forwarded to Prudential for processing.

The following is a summary of some of the important terms and conditions in the loan application agreement:

Loan limits

1) The borrower can borrow the lesser of $48,000 which is reducible by the excess (if any) of: (a) the highest outstanding balance of loans from the plan during the 12 months ending on the day before the day on which the loan was made, over (b) the outstanding balance of loans from the plan on the date on which such loan was made.


2) One-half of the present value of the non-forfeitable accrued benefit of the employee under the plan, subject to other requirements.

Loan amount

Subject to the terms of the borrower’s plan, the loan will either be 1) pro-rated across all available contribution types and investments, or 2) taken in a specific sequence.

Loan duration

The borrower must select the amount of time for repayment of the loan, which cannot exceed 5 years.

Loan fees

The loan application fee is $25 and will be deducted from the borrower’s account. If the borrower would like the loan check delivered by express mail, there will also be additional charge of $10.50.

Reinvesting of loan payment

The borrower’s loan payments will be re-invested according to the borrower’s current contribution investment direction. However, the borrower can change the loan payment investment direction, if permitted by the plan, by contacting Prudential.

Interest rate

The interest rate of the loan will be based on the bank prime loan rate on the last business day of each quarter. But, the borrower’s plan may specify an alternate interest rate. This interest rate will not change during the repayment period of the loan.

The company will declare the interest rate quarterly, but they reserve the right to change the loan interest rate more frequently. Prudential also has the right to change the basis for determining the interest rate with 30 days notice.

Interest on the loan is not deductible for federal income tax purposes.


Repayment amounts will include both interest and a portion of the outstanding principal. These repayments will be invested in the borrow’s investment account allocation on the date of the loan payment, though the borrower may choose otherwise. The loans may also be fully repaid, including outstanding principal and accrued interest, at any time without penalty. The company will send the borrower a bill about 20 days before the next payment due date.


The loan may be determined to be in default by the plan administrator or its agent for the following reasons:

  1. Borrower fails to make a payment on time.
  2. The borrower dies.
  3. Borrower fails to make timely payments on any other or future debts owed to the Plan.
  4. If it’s discovered that any statement or representation made by the borrower regarding the loan is materially false or incomplete.
  5. Borrower’s failure to act in accordance with the terms of the loan agreement or other loan-related document.
  6. Borrower becomes insolvent or bankrupt.
  7. Any action by borrower that would cause the Plan Administrator to reasonably conclude that such action would adversely affect borrower’s ability or likelihood to repay the loan.
  8. Borrower’s employment with the employer sponsoring the Plan terminates. But, if allowed under the Plan, the borrower may continue to make payments after termination of employment if the borrower follows certain requirements.

In the event of a default on the loan, the company or Plan may accelerate the loan and the entire amount of unpaid principal and accrued interest will be reported to the IRS as income to the borrower. The taxation of the loan amount will be in the year of the default and may incur a penalty from the IRS. Further, the default of a loan may negatively impact the borrower’s ability to secure a future loan.

Annuity important notes

Unless otherwise allowed in the borrower’s employer’s plan, each borrower is permitted only two outstanding loans at once.

Also, if the borrower decides to refuse the loan, he/she will have 10 business days from the date of issue to return the original loan check to the company. Thereafter, the amount of the loan will be reinstated to the borrower’s account and invested as dictated by the borrower’s current investment election, at current market prices on the settlement date of the transaction.