Retirement plan holders can take advantage of the Solo 401k loans to spend for education purposes
The cost of education has tremendously increased since 1985 to 538% while healthcare expenses increased by only 286% and consumer goods by 121%. Imagine how you can send your children to a decent university without hurting your savings, particularly your retirement savings. Education fees these days are so expensive that those who are not financially well off but eager to pursue have no choice but to apply for student loans. However, if you are a self employed Solo 401k holder, taking advantage of the Solo 401k loans is a way better option than drowning yourself with student loans.
If you aren’t aware yet, student loan is the second largest type of consumer debt that affects almost 40 million Americans. Most of us have this mentality that education institutions and colleges work like non-profit organizations and charities when in fact they are like the normal businesses running for profits in order to get through with their expenses and get ahead of their competition. That is why we have to carefully decide where to source the funds for education expenses before jumping off the cliff of being indebted with student loans.
When you take loans from 401k plan, you are borrowing money from your own retirement savings and not from banks or other lending companies. Yes, it could affect your retirement savings if you don’t pay on time just like any other loans, but at least there is no third party involved that will constantly run after you to remind you of your obligations to them. You can pay your solo 401k loan within 5 years with low interest rates around 1 to 2 percent compared to 6% or higher with student loans.
Taking loans from a 401k retirement plan is approved by IRS, but not all Solo 401k providers will allow you to access Solo 401k loans. This is actually one of the features of the Solo 401k that participants are entitled to use if circumstances arise. You can use this for any purposes aside from education expenses.
Incoming search terms:
solo 401k loan
solo 401k loan feature
best solo 401k plans
best individual 401k plans
loans from 401k