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Solo 401k Loan FAQ – What is the solo 401k loan grace period?
QUESTION:
What is the solo 401k loan grace period?
RESPONSE:
If solo 401k loan payments were missed, then the solo 401k loan may be in default. If a Solo 401k loan is defaulted, the loan value at the time of default is taxable and reported to the plan participant and to the IRS on IRS Form 1099-R.
The solo 401k participant loan grace period allows for the missed loan payment to be made by the end of the quarter following the quarter of the missed payment.
For example, if the solo 401k participant loan is being paid back on a monthly basis and the monthly scheduled payment was due on July 15 but the payment was missed, the missed payment would need to be made by December 31 (the end of the grace period).
