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Updated almost 6 years ago,

User Stats

15
Posts
8
Votes
Dawna Willis
  • Memphis, TN
8
Votes |
15
Posts

Purchasing Real Estate with a Solo 401K loan

Dawna Willis
  • Memphis, TN
Posted

I would like to roll over funds from a 401K with a previous employer to a solo 401K with the intent to take a personal loan of 50% of the funds.   I would take the $20K and add it with personal cash from my husband to purchase a duplex from an older relative for $35K.   It appraises for $52K and is currently occupied with 2 long-term Section 8 tenants.  I would do the max loan repayment of 5 years, but intend on paying off in maybe 2.5 years if not sooner by using most of the rent payments towards the loan repayment.  Is there anything I need to consider that I may be missing if using a solo 401K loan?   No early repayment penalties, nor any restrictions on what to purchase with the loan money?   I know purchasing property from a relative is prohibited inside a retirement vehicle, but want to make sure it doesn't apply to the solo 401K loan as well.   

Thanks in advance for any insight.  

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