Tap Solo 401k for Retirement Home Down Payment

QUESTION:

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?

ANSWER:

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%).

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About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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