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Solo 401k Loan FAQ – If I previously defaulted on a 401k loan, can I take another?
QUESTION:
If I previously defaulted on a 401k loan, can I take another?
RESPONSE:
Defaulted loans will impact the ability to borrow more funds from the solo 401k plan.
Essentially, even though the loans that are in default will be treated as distributions, the outstanding solo 401k participant loan balances will be taken into account in processing and in calculating the maximum amount of any subsequent solo 401k participant loan. The unpaid amount of the loan(s) that went into default, including accrued interest is considered outstanding for purposes of determining the maximum dollar amount of any subsequent solo 401k participant loan.
