Self-Directed Solo 401k 60 Day Rollover Distribution

QUESTION: I know IRA rules allow me to take money from it for short term use of less than 60 days and put that back into the IRA as rollover without being regarded as distribution. Is this allowed for a solo 401k and how? 

Answer: Yes it is generally more advantageous to process a 60 day rollover distribution from an IRA than from a solo 401k because the 20% mandatory federal tax does not apply to IRA distributions. On the other hand, 20% of federal taxes has to be withheld from the solo 401k distribution and wired to the Department of the Treasury even if you plan to rollover the funds back to the solo 401k or an IRA within 60 days. As a result, if you process a distribution from your solo 401k, you will only be able to rollover 80% of the funds unless you can come with the other 20% from your personal bank account. 

To learn more about the solo 401k distribution rules click here.