Does Fidelity Allow 401k Loans?

Short answer: Fidelity’s basic Solo 401k plan does not allow 401k participant loans.
But that doesn’t mean you’re stuck. If you already hold a basic Fidelity Solo 401k — or you’re
comparing your options before opening one — you can upgrade (“restate”) your plan documents to those
provided by My Solo 401k Financial and unlock participant loans, the
Mega Backdoor Roth, alternative investments, and SECURE Act tax credits —
all while keeping your account right where it is at Fidelity.

Below is the comparative blueprint: why Fidelity’s basic plan blocks loans, how a restatement resolves it, and the
exact process to fund and execute your Solo 401k participant loan.

First, Are You Eligible for a Solo 401k?

Before discussing loans, start with eligibility. A Solo 401k — also called a one-participant
plan or owner-only plan — comes down to two fundamental requirements:

1. Self-Employment Income

You must report earned self-employment income on your taxes. How you report it depends on your entity type:

2. No Full-Time Non-Owner, Non-Spouse W-2 Employees

You cannot have any non-owner, non-spouse, full-time W-2 employees working for any business owned by you or your
spouse. For this purpose, a full-time W-2 employee is one working 1,000 hours per year with a year of
service, or 500 hours per year for two consecutive years.

Why Fidelity’s Basic Plan Blocks 401k Loans

Being eligible lets you open a Solo 401k — but there are big differences between the basic plans
offered by discount brokerages like Fidelity and an individually designed Solo 401k offered by
My Solo 401k Financial. Fidelity’s basic prototype plan documents simply don’t allow many of the
advanced features.

The Fix: Restate Your Plan Documents

You’re not stuck with those basic Fidelity documents. The process to upgrade is called a restatement.
Importantly:

• You are not setting up a second plan.
• You are not shutting down your Fidelity plan and starting over.
• Your plan continues — now governed by My Solo 401k Financial’s IRS-approved documents.

Those upgraded documents enable Solo 401k loans, Mega Backdoor Roth contributions, alternative
investments, and the ability to claim SECURE Act tax credits. Want the deeper mechanics on after-tax dollars? See our
detailed guide on the
Mega Backdoor Roth using a Solo 401k plan.

How the Process Works

1. Replace the documents. We prepare your restated documents to upgrade your plan within the same business day when you sign up.
2. Open new accounts. You’ll open new accounts — which can stay at Fidelity. These are called non-prototype or investment-only accounts, used by Fidelity for people who bring their own plan documents. We help you open them as part of onboarding.
3. Transfer cash and assets. Move the cash and assets from your existing basic plan into the new accounts governed by the upgraded documents. Assets can transfer in kind — you don’t have to sell your investments.

Solo 401k Loan Rules at a Glance

A Solo 401k loan lets the solopreneur access money in their Solo 401k — for any purpose —
without taxes or penalties, as long as the loan stays within the required terms and is paid back on schedule. We prepare
all the required loan documents.

Hassle-Free Document Preparation

When you let us know you want to take a loan, we prepare the amortization schedule and all required loan documents —
in one business day. You then repay according to the schedule, with the option to prepay early
with no penalty, back into the same account from which the funds were withdrawn.

Flat Fees and SECURE Act Tax Credits

My Solo 401k Financial charges a flat fee regardless of your account value: $650 initial cost
(a $525 establishment fee plus the first $125 annual fee), then a $125 annual fee starting twelve months
later. That covers ongoing support — including preparing required loan documents and electronic Form 5500-EZ filing
for clients who notify us in a timely fashion.

We were the first provider to offer a Solo 401k plan enabling Mega Backdoor Roth contributions, and the
first to enable solopreneurs to claim tax credits under the SECURE Act: $500 per year for three
consecutive years ($1,500 total). Because it’s a tax credit — a dollar-for-dollar reduction in tax
liability, not just a deduction — it more than covers our fees for the first seven years.