For those clients looking to take a Solo 401k participant loan (i.e. borrow funds from their own Solo 401k account), please complete the questionnaire below to prompt us to prepare the required Solo 401k participant loan documents.
General Information Regarding the Solo 401k Loan Rules
IMPORTANT: If you have already borrowed from the solo 401k plan and have outstanding loan balances, you may not be able to borrow additional funds or may only be able to borrow a small amount. Please see the following link for more on these rules. https://www.mysolo401k.net/solo-401k-loan-limits/
- Maximum loan amount is 50% of entire Solo 401k balance not to exceed $50K
- Minimum loan balance is $1K
- Loan Payment Interest rate is 7.75% (made up of prime rate of 6.75 + 1)
- Fixed rate can not be increased or decreased once loan is processed
- Use of Borrowed Funds You can utilize loan proceeds however you see fit unless the proceeds are used toward the purchase of your primary residence and your loan payback period is for more than 5 years.
- Loan is paid back in equal and fixed payments– quarterly or monthly
- Early Payment: Loan can be paid back early without penalty
- More than 5 Years Loan period is maximum of 15 or 30 years if funds are used for the purchase of a primary home purchase
- 5 Year Loan period is a maximum of 5 years if used for all other purposes
- Timing: We process loan documents within 24 to 48 business hours at no additional cost.
- E-mail: We e-mail loan docs to you for signature
You obtain the loan proceeds from the solo 401k checking account by writing a check payable in your name and write “Solo 401k Participant Loan” on the memo section of the check.
You e-mail or fax the signed loan docs back to our company.
Please visit the following links from our website and blog to learn more about loan rules.