This page contains the Solo 401k participant loan packet. Detailed information on how to obtain and administer your loan is provided to assist you with this process. In order to take a participant loan from the Solo 401k, please complete the following steps:
- Complete the Solo 401k Loan Application. As Plan Administrator, you must keep the completed Application as well as all records of the plan’s activities.
- Take the designated loan amount from your Solo 401k account. This can be done by writing yourself a check from your Solo 401k Trust bank account with the memo “Participant Loan”.
- Pay back the loan according to the terms outlined on the Loan Application.
The Loan Application is a PDF file containing following loan documents:
- Loan Application
- Spousal Consent
- Promissory Note
- Irrevocable Pledge & Agreement
The above referenced document contains interactive fields allowing you to fill it on your computer and then print it out for execution. After signing the documents, please email them back to us our records.
The following link will take you to the Solo 401k loan calculator. Follow the instructions provided on the page to calculate your loan payments. After obtaining loan amortization schedule print it out and keep it together with your loan package:
Once the above forms are completed, printed, and signed, you can then obtain proceeds for the loan from the Solo 401k checking account. The check should be made payable to you as the participant of Solo 401k Plan with “Participant Loan” noted on the check memo line.
Information regarding borrowing (taking participant loan) from the Solo 401k Trust:
- Maximum loan amount is 50% of entire Solo 401k balance not to exceed $50K
- Minimum loan balance is $1K
- Loan Payment Interest rate is Prime + 1% (https://www.bankrate.com/rates/interest-rates/prime-rate.aspx)
- This rate can not be increased or decreased once loan is processed
- You can utilize loan proceeds however you see fit
- Loan is paid back in equal and fixed payments: quarterly or monthly
- Loan can be paid back early without penalty
- Loan period is maximum of 15 years if funds are used for primary home purchase
- Loan period is maximum of 5 years if used for all other purposes
Please refer to Section 9 “Participant Loan” of the Basic Plan Document which was e-mailed to you when the Solo 401k Plan was first established, as it contains all the rules pertaining to the loan.
Following web pages from our website also contain useful information regarding Solo 401k participant loans:
Should you have any questions about any aspect of the participant loan, please don’t hesitate to contact us.