Face Financ ia l Hardsh ips Wi th Confidence

Understand ing a

Solo 401k Loan

Dmitriy Fomichenko

President & FounderSense Financial Services LLCwww.SenseFinancial.com

{ }What is a Solo 401k& How to borrow from it1

A Solo 401k is a qualified retirement plan designed for

small business owners and self

employed individuals.

Eligibility: Your plan documents must allow borrowing from the plan

Borrowing Limits: Up to $50,000 or 50% of account balance, whichever is lower.

How to borrow from your Solo 401k plan

•No credit checks•No loan eligibility requirements

Financial Independence

•Usage discretion•Low interest rates

Self-sustenance

Benefits of Borrowing From Solo 401k

{ }Understanding RepaymentRules defining loan repayment terms2

A bank is a place that will lend you money if you can prove that you don't need it.

“ “Bob Hope

Solo 401k Loan Repayment Terms

Interest Rates: Prime rate plus 1% interest

Loan term: 5 years (more in some conditions)Payment frequency: At least once in a quarter

{ }What if the loan goes bad?How to handle a default?3

3

2

When does a Solo 401k loan go bad

1 When you have not paid the loan in the defined amortization period (5 years).

The loan goes in default if the amount exceeds the maximum permissible limit.

If the quarterly repayment schedule is not followed.

The only way you can resolve a defaulted Solo 401k loan is if the plan documents have a provision for resolution. In that case, any missed quarterly payments should be made within that quarter only.

How to resolve a Solo 401k loan default?

2

How does the IRS treat a bad Solo 401k loan?

1 The loan becomes a taxable distribution immediate effectively.

For account owners below the eligible retirement age, early-withdrawal penalties will apply.

{ }Solo 401k Real Estate Investing Case Study

Client Case StudyHow this investor bought a house with her Solo 401k Loan

Click the screen or the text above

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