Tap Solo 401k for Retirement Home Down Payment
I’ve had a Oppenheimer SEP IRA for about 20 years and retired. I’m interested in buying a retirement home and would like to tap that account for a $50,000 maximum loan for the down payment, but apparently must first convert it that plan to a solo 401k?
Our Solo 401(k) plan would certainly allow you to take a loan. You would be able to borrow up to 50% of the balance not to exceed $50,000. You would be able to use the proceeds of the loan for virtually any purpose (e.g. paying off personal credit card debt, business financing, tuition, etc.). Many of our clients enjoy this feature because it allows them to access funds quickly (e.g. no credit approval process, etc.) and without having to pay back interest to a bank (i.e. the loan is paid back to your own retirement account). Moreover, if the funds are used to purchase your primary residence then the term can be longer than the standard 5-year term. Please see the following link for more information: Primary Residence Loan
As part of our service, we would handle all of the required loan documentation requirements for no additional charge. As far as the terms of the loan, you would need to pay it back on a monthly or quarterly basis (as you select) over a five-year term (or longer per the link above) with payments of principal and interest at a rate of prime +1% (which would currently amount to 5%).