QUESTION:
Can I take a short term loan out of my Solo 401K? I want to take 5K out for 1 week and put it back.
ANSWER:
While the minimum solo 401k participant loan amount is $1,000, the rules do allow for early payoff of the loan with no pre-payment penalties.
If you’re trying to take a distribution and put it back within 60 days similar to the process with an IRA, the rules are different for a Solo 401(k) plan. For example, when you try to do the same with a solo 401k plan, a 20% federal tax has to be submitted to the Department of the treasury even if you later want to rollover the amount distributed back to the Solo 401(k) plan, and in order to take such distribution, a triggering event has to be satisfied. Please see the following for more on this and give us a call if you have more questions.
https://www.mysolo401k.net/does-the-20-federal-tax-withholding-apply-to-all-401k-distributions/
https://www.mysolo401k.net/good-60-day-rollover-from-a-solo-401k-plan-questions/
https://www.mysolo401k.net/making-solo-401k-distributions/
