I am finally getting some if my other pensions rolled into my new Solo 401K this week. Next, I think I will indeed want to take out a loan from the solo 401K, and I have a question or two about that.
QUESTION 1: First, I understand the standard period for a loan is 5 years. Am I allowed to accelerate payments, or pay in full at any time?
ANSWER: Yes the solo 401k regulations allow for accelerated loan payments without a pre-payment loan penalty. If you decide to pay the solo 401k loan back in full and early, please let your solo 401k provider know and so that they perform a calculation for you.
QUESTION 2: Second, can more than one loan be taken at different times, so long as the $50K limit isn’t overstepped?
ANSWER: Yes and click on the IRS solo 401k loan regulations to learn about the multiple solo 401k loan rules. Essentially, the maximum loan limit may not be exceeded during a 12 month period. When you click on the above IRS link, you will see an example concerning the 12 month solo 401k loan rule.
Thanks alot, Christine in Indiana