Primary Residence 401k Loan – Using Your 401k to Buy a Vacant Lot


I have over $100,000 in my Solo 401k and want to take a $50,000 401k loan.  If I use the proceeds of my Solo 401Ik loan to purchase land intended to build a house for primary residence, can the term of the loan be longer than 5 years?  Must there by a residence already on the property, or does a vacant lot count?


Generally a 401k loan must be repaid within 5 years.  The 5 year repayment requirement does not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used as the principal residence of the participant. [Internal Revenue Code Section 72(p)(2)(B)]
A vacant lot is not a dwelling unit – i.e. a building where someone could sleep, eat and reside.
Moreover, given the time that that will take to construct a home on the vacant lot, it will likely be a significant amount of time before the house will be used as your principal residence.
Therefore, purchasing the lot does not qualify for the principal residence loan exception to the 5 year repayment requirement.  As a result, while you can use the proceeds of your 401k loan to buy a vacant lot, the loan must be repaid within 5 years.



About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>


  • Popular Video

  • ROBS 401k Funding Process

  • Solo 401k Contributions Including Mega

  • Checkbook IRA LLC

  • About MySolo401k

    We help our clients take control of their retirement money. Our products and services provide our clients the freedom to invest their retirement savings in their own business as well as alternative investments such as real estate, private companies, promissory notes, precious metals, tax liens and equities.
    Learn more

    Connect with us

  • We’re here to help.

    Call: 800-489-7571


    8:00 am - 4:00 pm PT

    Why us?