The Free Solo 401K Loan Calculator
Internal Revenue Code Section 72(p) allows a Solo 401K Plan participant to take a loan from his or her Solo 401K Plan, also called an Individual 401K or Self Directed 401K, so as long as it is permitted pursuant to the business s 401K Plan documents.
A Solo 401k loan is permitted at any time using the accumulated balance of the Solo 401K as collateral for the loan. A Solo 401K participant can borrow up to either $50,000 or 50% of their account value – whichever is less. This loan has to be repaid over an amortization schedule of 5 years or less with payment frequency no greater than quarterly. The interest rate must be set at a reasonable rate of interest. The lowest interest rate permitted to be used for the Solo 401K Loan is the Prime Rate as per the Wall Street Journal, which as of 1/1/15 is 3.25%.
The Interest rate is fixed based on the rate at the time of the loan application.
It s important to make sure that all loan payments are made on time. If a loan repayment is missed, the entire loan amount becomes due and payable and is treated as a taxable distribution, and if applicable, a 10% early distribution penalty.
*Please enter the First Payment Date in mm/dd/yy format.
Did you know? With a Solo 401(k) Plan loan, you are actually paying yourself back.