Payoff Solo 401k Participant Loan Balance and Borrow Again

QUESTION:

We are wondering if we could pay off our solo 401k loan balance now and then borrow a larger amount against it again.

ANSWER: 

Good question. As you can imagine, specific IRS rules apply to solo 401k participant loans when paying one off and then borrowing from the solo 401k plan again.

Specifically, yes the solo 401k rules allow for paying the solo 401k loan early without prepayment penalties. However, in the case of paying back the loan early and in full, at least 12 months has to lapse since your prior loan in order for the solo 401k participant to borrow from the solo 401k again. To learn more about this 12 moth solo 401k participant loan regulation,VISIT HERE.

To learn more about the solo 401k regulations, CLICK HERE.