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Self-Directed Solo 401k Loan Facts
Unlike a that does not allow the participant to borrow from his or her self-directed IRA, the Solo 401k regulations permit the Solo 401k owner to borrow from his or her . As a matter of fact, both self-directed Solo 401k owners/participants can each borrow from their respective plan funds.
Self-Directed Solo
401k Participant Loan Facts
Each self-directed Solo 401k trustee/participant can borrow from self-directed Solo 401k for any reason.
The
self-directed Solo 401k loan period is 5 years for general loans, defined as
loans where the proceeds will not be used towards the purchase of primary home
residence.
The Solo 401k loan term is extended from 5 years to 15 years provided borrowed proceeds are used for the purchase of principal residence.
Self-Directed
Solo 401k loan payments are processed either monthly or quarterly.
The interest rate for self-directed Solo 401k loan is either: prime rate plus 1 percent or certificate deposit rate plus 2 percent.
Self-Directed Solo 401k loan payments are fixed made up of interest and principal.
Self-Directed Solo 401k loan rules do not permit payment of only interest or principal.
Self-Directed Solo 401k loan early payoff allowed without penalties.
The minimum Solo 401k loan amount is $1,000.
The maximum self-directed Solo 401k loan threshold is 50% of account balance not to exceed $50K.
illustration 1: Self-Directed Solo 401k balance is $60K; 50% of $50K =
$30K (the self-directed Solo 401k maximum loan amount)
illustration 2: Self-Directed Solo 401k balance is $200K; 50% of $200K = $100K; however, the maximum permitted self-directed Solo 401k loan amount is $50K.
To
To qualify as a compliant self-directed , the loan must be in writing and documented as follows:
·
Solo
401k Loan Agreement
·
Solo
401k Loan Application
·
Solo
401k Loan Payment Amortization Schedule
To learn more about the Solo 401k plan rules, including how to invest in real estate, visit:
http://www.mysolo401k.net or call
800-489-7571
Comments (1)
I often see the loan percentage can be "CD Rate" + 2%. What is the CD rate? Isn't it 0% today? So, would the loan be @ 2%?
Hari T., over 11 years ago