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  • Solo401k loan forms

    Mark Nolan replied 7 months, 1 week ago 2 Members · 2 Posts
  • 1 Reply
  • Jeff B.

    Top SubjectSolo 401k Contributions,Solo 401k Loan
    Top ForumsSolo 401k Contributions, Solo 401k Loan

    Jeff B.

    Jeff B.

    Top SubjectSolo 401k Contributions,Solo 401k Loan

    December 6, 2023 at 9:22 am

    My wife is using money from her IRA that allows 60 days to be paid back before it becomes a taxable distribution. She used this to help pay cash for a condo before she sells her existing condo. I have agreed to loan her the money (max $50k is less than 50% of my account) to pay back her IRA before the 60 day deadline and I will use her new condo as collateral. I have looked through the links for a Solo401k loan paperwork and the only thing I have found is under “Forms” and is labeled as Promissory Note and

    Is the form that I need to fill out? My Solo401k is being held by Fidelity. Once this form is completed, do I just take a distribution from my Solo401k myself?


    Jeff B

    Jeff B.
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    December 6, 2023 at 11:47 am

    While it is prohibited to directly loan your solo 401k funds to your spouse; yes you can process a solo 401k participant loan from the solo 401k and use the funds however you wish asn once the funds are borrowed by the solo 401k participant they are no longer considered solo 401k funds.

    I understand that you are considering taking a Solo 401k participant loan (i.e. borrowing funds from your own Solo 401k account). When you are ready to proceed, please complete the questionnaire on the page linked below to prompt us to prepare the required Solo 401k participant loan documents.

    Following are some quick facts regarding the solo 401k participant loan rules.

    • Each participant can borrow from the solo 401k provided each has a solo 401k balance; however, the solo 401k loan calculation is based on each solo 41k participant’s respective loan balance–not the entire value of the solo 401k plan.
    • The solo 401k loan does not affect your personal credit or business credit score because you are borrowing from the solo 401k plan; therefore, there is no credit check.
    • The Solo 401k loan term is 5 years for general loans.
    • The Solo 401k loan term can be more than 5 years not to exceed 15 years if used to purchase principal residence for you as trustee/participant of the Solo 401k.
    • Solo 401k loan payments are made either monthly or quarterly.
    • Solo 401k annual contributions from self-employment income cannot be used/applied towards payment of solo 401k participant loans.
    • Solo 401k participant loan payments must be made with personal funds, not business funds or solo 401k funds.
    • Since the solo 401k participant is borrowing from the solo 401k plan, at time of loan the loan proceeds must flow to the solo 401k participant’s bank account, not her business. Once the funds are in your personal bank account, you can then disburse them however you wish including placing them in your own business bank account.
    • The interest rate for Solo 401k loans is either: A certificate deposit rate plus 2 percent or the prime rate plus 1 percent.
    • Solo 401k Loan payments are fixed payments consisting of interest and principal
    • Solo 401k loan rules do not allow for Interest only payments or principal payments only.
    • Each solo 401k participant can borrow from his or her respective solo 401k balance. For example, if both spouse’s are participating in the solo 401k plan and have account balances, each can borrow up to the statutory limits described below.
    • The maximum Solo 401k loan amount is either 50% of account balance or maximum amount of $50K.

    – Example 1: Solo 401k balance is $50K; 50% of $50K = $25K (the Solo 401k maximum loan amount)

    – Example 2: Solo 401k balance is $150K; 50% of $150K = $75K; however, the maximum permitted Solo 401k loan amount is $50K

    – The minimum Solo 401k loan amount is $1,000.

    • The Solo 401k rules require the following proper Solo 401k loan documentation:

    – Solo 401k Loan Agreement

    – Solo 401k Loan Application

    – Solo 401k Loan Payment Amortization Schedule

    You can obtain more information regarding borrowing/taking a participant loan from a Solo 401k at:

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