The Solo 401 k loan option is available to all Sense Financial account holders who took advantage of the great investment opportunity offered by the 401 k plans for self employed individuals and small business owners. This amazing feature allows account holders to take an Solo 401 k loan of up to $50,000 from their retirement account for any purpose whatsoever.
Purchasing a Home Using Solo 401 k Loan Feature
One of the reasons people same money for retirement is to use the funds that can be used to purchase a home for their retirement. However, most retirement accounts do not allow use of funds for personal benefits until retirement age.
Fortunately, Solo 401 k Loan Feature allows account holders to have access to their funds before their retirement years, because it allows them to borrow up to 50% of their total retirement account value or $50,000 (whichever is lower) anytime, for any reason, including purchase of primary residence.
Solo 401 k Loan Easy Payment Option
The Solo 401 k Loan allows account holders to borrow money from their retirement funds anytime they want. Typically the loan policy requires the loan to be repaid back within 5 years. However, if the borrowed amount is used for purchase of a primary residence, the loans can be extended from 5 years to 15 years.
The interest rate for the Solo 401 k loan is fixed and is based on the prime rate when the loan application was submitted. Plus, 401k loans are received tax and penalty free in accordance with the 2001 EGGTRA rule and section 72(p) of the internal revenue code.
Payments for the Solo 401 k loan should be made at least once each quarter, including the interest (generally the prime rate during the time of application plus one percent). All payments go directly to the retirement account. Non-compliance with the loan terms may result in penalties.
Solo 401 k Loan Flexibility
The Solo 401 k loan can be used by account holder for any purpose, including consolidating debts, paying college tuition fees, lending money and making investments.
Taking an Solo 401 k loan is easy. Once all documents are prepared, plan participant can simply write a check to himself using the retirement account checkbook to get the loan amount. It is also important to note that not every Solo 401k Plan provider offers these options. Look for truly self-directed Solo 401k, where you control your account as plan trustee.
For additional information about Solo 401 k loan feature, please contact one of our Solo 401k experts.