Here’s what you need to know about taking a loan from your Solo 401k:
You may borrow up to 50% of the total amount in the Solo 401(k), with a maximum cap of $50,000.
There are no restrictions on the funds. They can be utilized for any purpose.
Taking out a loan is an easy two-step process:
And that’s it! Because you are the designated plan administrator, you don’t need to send or file the forms with anybody else. Just keep them safe in your binder and use them for reference as needed.
The loan may be held for up to 5 years, (or 15 years if the loan is used to purchase a primary residence.)
Yes. However, the interest rate itself is not fixed. Any commercial viable rate similar to what banks would lend someone in your circumstances can be used. Just keep in mind that the interest being paid is not lost to you. It’s going back into your retirement fund where you will be able to utilize it along with rest of your Solo 401(k).
You can pay with a personal check made out to your Solo 401(k). The payments are made quarterly. The amount of each payment will be calculated based on the amount of the initial loan, the duration of the loan, and the interest rate. See our Solo 401k loan calculator which can help you find out the amount of the quarterly payments.
Yes. However, the total loan amount may never exceed the 50% or $50,000 cap.
You can borrow again, up to $50,000, minus the highest loan balance in the past 12 months.
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