Self-Employed Individual 401k FAQ – When can I withdraw funds from my Solo 401K?
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Self-Employed Individual 401k FAQ – When can I withdraw funds from my Solo 401K?
QUESTION:
What are the different ways that I can withdraw funds from my Solo 401k – say for emergency expenses or for retirement?
RESPONSE:
There are different scenarios where a Solo 401k owner can withdraw funds.
First, with our Solo 401k plan, the solo 401k owner may take a Solo 401k participant loan. One of the top reasons why clients set up accounts with us is that they are able to borrow up to 50% of the balance of their solo 401k not to exceed $50,000 as a Solo 401k participant loan. There is no qualification requirement provided that the Solo 401k loan is properly documented. We handle the documents as part of our service for no additional charge. See more: Solo 401k Loan Rules and Regulations
Another scenario where funds might be withdrawn from the solo 401k is a taxable distribution. The self-employed individual must be eligible to take a Solo 401k distribution (i.e. meet certain triggering events) – typically, the solo 401k owner must be at least 59 1/2 years of age before the individual can take a taxable distribution. See more: Making Solo 401k Distributions
Finally, another type of scenario where the solo 401k owner can take money out of the plan would be a hardship but please note that the individual must be able to satisfy the rules regarding taking a hardship withdrawal – see more: Solo 401k Hardship Distributions
