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Two callers, similar circumstances…two drastic responses!

When I worked for the retirement services company, one of the issues we handled was hardship withdraws. These are typically:

  1. Educational expenses (college only)

  2. Funeral expenses

  3. To prevent eviction or foreclosure

  4. To repair a home (usually only cause by natural disaster)

  5. Medical expenses

And the one that is the topic of this story

  1. Expenses on the purchase of a new home (basically closing costs).

In my call center, when a client called asking about a withdraw for purchasing a home, we were encouraged to (if allowed by the retirement account) to offer a home loan from their retirement account. Its pretty much the same process as performing a personal loan, with the max being $50,000 but clients had to submit closing cost paperwork with the home loan application and the repayment time is usually extended up to 30 years (depending on the retirement account) instead of 5 years for personal loans.

The benefits of a home loan are: you are paying yourself interest, it is not a taxable event (unless you leave or retire from your job), you are putting money back into the account whereas a withdraw you don’t.

Caller 1 (Dave)- about 36, retirement account has close to $90K and was going to withdraw everything to buy a house in NY.

Me: Sir, has anyone ever told you about a home loan?

Dave: What’s that?

Me: (explains what a home loan is)

Dave: How much is the loan repayment?

Me: your repayment based on a 20 year loan for $45K will be $92 every pay period.

Dave: Can I do a loan and a withdraw at the same time?

Me: Yea sir you can!

Dave: So what is the benefit to me?

Me: (Tells him the benefits). On top of those benefits, your tax bill will only be based on $45K instead of $90K…and…you will be rebuilding your retirement account almost immediately. Since you are taking a withdraw as well, You can’t contribute for six months, but as you are paying back your loan, its almost like putting in a contribution. Additionally, at six months rather than contributing again at a $0, you’ll have $XXX amount instead.

Dave: okay, okay…you’ve sold me! Let’s do this home loan and then the process the withdraw.

Me: Awesome sir! I’ll start the paperwork right away and send it to you for your signature. And congrats on your new house!

Caller 2 (Karen)- about 32, retirement account close to $80K and is withdrawing all to purchase a house in CA.

Me: Ma’am, has anyone spoken to you about a home loan?

Karen: Yeah someone has spoken to me about it, I’m not interested.

Me: Are you sure ma’am? Maybe we can go over the benefits and differences…

Karen: Look, I don’t care about having a retirement account right now! I’m still young and can recover from this…just get me my money, okay.

Me: Not a problem. I’m just trying to help you for your future retirement and-

Karen: I didn’t ask for help on that? I’m stressed as it is and I don’t want to deal with any more paperwork! Just get me my money so I can close on this house!

Me: Very well. I just have to go over—

Karen: Stop going over things and process my paperwork!

Me: Ma’am, I am required to go over some legal info with you—

Karen: NO YOU DON’T!!! I’VE HEARD ENOUGH LEGALIZE FROM YOU PEOPLE. STOP PLAYING AROUND AND TELL ME WHEN I’M GETTING MY FUCKING MONEY!!!

Me: You should receive your check in the mail within 3-4 business days.

KAREN: ARE YOU FUCKING SERIOUS!! I WANTED IT TO BE DIRECT DEPOSITED! WHY IS IT BEING MAILED TO ME!!!??? YOU CAN’T EVEN DO YOUR JOB RIGHT!!!

Me: ma’am, I was trying to go over with you your options of receiving your funds. However, since you kept cutting me off, and kept demanding your money, I couldn’t verify the routing and account number. Therefore, you withdraw has been approved, and now you will receive a check in the mail.

KAREN: LET ME SPEAK TO YOUR SUPERVISOR NOW!!!

Me: Please hold ma’am! (DMing the supervisor on duty to prepare him for the call). Okay, I found a supervisor that will take your call.

Transfers call and listens in for a few seconds

Karen: YOUR MORON TRIED TO SELL ME A HOME LOAN AND THEN PROCESSED A WITHDRAW IN A CHECK FORM!!! THAT IS UNACCEPTABLE!!!

Sup: Ma’am, we don’t sell loans here. He was looking out for your best interest for retire—

Karen: WHY DO YOU PEOPLE CARE SO MUCH ABOUT MY RETIREMENT!!! THATS NONE OF YOUR BUSINESS!!

Sup: Ma’am…we are a retirement management company.

At this point I hung up. A few days later, Karen’s check is returned as undeliverable because she had misspelled her employer’s mailing address. She put both her banking account info and her employer’s mailing address. By policy, if we couldnt verify the account info, we have to mail the check to her employer’s address…IF PROVIDED!! Easy mistake that could’ve been caught when we verify info but she was not having it!

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