The University of California (UC) is implementing a change to how UC 403(b) Plan loans are repaid. Retirement Program Services is sharing this update to help employees prepare for the transition. The information below outlines what is changing, what employees need to do, and when these changes will take effect.
What’s changing
UC is updating the repayment method for UC 403(b) Plan loans. Currently, employees with an outstanding UC 403(b) Plan loan have their repayments deducted from their paycheck and applied directly to their retirement account.
Beginning in April 2026, loan repayments will no longer be deducted from an employee’s paycheck. Instead, employees must make their loan repayments using Fidelity’s Automated Clearing House (ACH) service, which deducts payments directly from their bank account.
What this means for employees
- Loan repayments deducted from employee paychecks are scheduled to end with paychecks issued after April 8, 2026.
- Employees will need to set up ACH loan repayments to continue making payments on their loan. Instructions will be shared in future communications.
- For biweekly‑paid employees, the repayment schedule will change from biweekly to monthly.
How employees can prepare
Employees will be able to set up their ACH loan repayments starting April 13, 2026. In the meantime, they can prepare for this change by:
- Ensuring they have an active bank account that can be used for ACH loan repayments.
- Considering how a monthly payment schedule may differ from their current biweekly deductions.
- Watching for emails beginning in March 2026 that will include step‑by‑step instructions for setting up ACH loan repayments.
Important reminder about missed repayments
If an employee does not establish ACH loan repayment, their loan could “default” and be treated as a taxable distribution for the outstanding loan balance. This would make the balance subject to income tax and potentially a 10% early withdrawal penalty. A defaulted loan may also affect their eligibility to request additional loans.
Participant questions
If employees have questions about this transition or how to set up ACH loan repayments, they may call a Fidelity representative at 1‑866‑682‑7787. Representatives are available Monday to Friday, 5:30 AM to 5:00 PM Pacific Time.
Communications and resources
Fidelity will distribute communications about the UC 403(b) Plan loan repayment change to affected employees beginning with an initial notice by the week of Monday, February 16, 2026, and continuing through July 2026. Starting in March 2026, Fidelity will send emails with detailed, step‑by‑step instructions for setting up ACH loan repayments.