Multiple Solo 401k Plans Participant Loans

QUESTION:

When we have multiple solo 401k accounts set up under one trust, can we take a personal loan from both accounts or just one loan per trust?

ANSWER:

Each solo 401k participant can borrow 50% of their respective solo 401k balance not to exceed $50,000.

For example, if participant 1 has a solo 401k balance of $60,000, the maximum she can borrow is $30,000. On the other hand, if participant 1 has a solo 401k account balance of $100,000 or more, the maximum she can borrow is $50,000.

The above example would also apply to solo 401k participant number 2.

With respect to being able to borrow from multiple solo 401k plan, the IRS rules require that you aggregate all of your solo 401k plans when taking a solo 401k participant loan. This is to prevent you from exceeding the solo 401k loan limits by opening up multiple solo 401k plans.

This is one of the reasons why it is not a good idea to open up multiple solo 401k plans as the IRS frequently performs compliance checks for those that have multiple solo 401k plans.

Visit FAQs to learn more about the solo 401k rules.