ForumsSolo 401k LoanMaximum loan amount if I have both Solo k and Roth Solo k

Forums Solo 401k Solo 401k Loan Maximum loan amount if I have both Solo k and Roth Solo k

  • Maximum loan amount if I have both Solo k and Roth Solo k

    Sophie W, replied 4 months ago 2 Members · 5 Posts
  • 4 Replies
  • Top SubjectSolo 401k Contributions,Solo 401k
    Top ForumsSolo 401k Contributions, Solo 401k

    Sophie W,
    Top SubjectSolo 401k Contributions,Solo 401k

    March 10, 2024 at 11:22 pm

    Hey guys,

    I am thinking of taking out a loan/loans from my solo k. I read some articles, it seems the maximum loan amount is 50% of the account value, or $50,000, whichever is lesser. However I am unsure how it works if I have both Solo k and Roth Solo k.

    Here is my scenario: If I have $50k cash and assets in Solo K, and $50k cash and assets in Roth Solo k:

    • If I were to take out one loan from the Roth Solo k, is the maximum loan amount $50k (50% of the total value) or $25k (50% of the Roth Solo k value)?

    • If I were to take out several loans from both Solo k and Roth Solo k, does it mean as long as the total of the loans does not exceed 50k in a 12-month period, I am good?

    Also if I pay back the loan monthly according to the amortization schedule, and pay back the loan earlier than the term ends, there is no tax consequences or reporting needs, correct?

    Thanks so much for your kind help!

    Sophie

    Sophie W,
  • George Blower

    Top SubjectDaily Live Webinar,Solo 401k
    Top ForumsDaily Live Webinar, Solo 401k

    George Blower

    George Blower

    Top SubjectDaily Live Webinar,Solo 401k

    March 11, 2024 at 3:54 am

    1) Correct – if the loan is paid back according to the payment schedule the loan is neither taxable nor reportable.

    2) Yes you can take a 401(k) participant loan from your Roth solo 401(k) sub-account. If you use both pretax and Roth funds to fund your 401(k) participant loan, this would need to be documented as two separate loans (i.e. one from the pretax account and the second from the Roth account’s). Note that the statutory IRS solo 401k participant loan limit would be aggregated between both sources (the pretax and the Roth account). The maximum Solo 401k loan amount is either 50% of account balance or maximum amount of $50K.

    See more: Solo 401k Loan Rules and Regulations – My Solo 401k Financial

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