Self Employed Loan using the 401k

Self employed loans are permitted up to 1/2 of the total value of the Self Employed 401k up to a maximum of $50,000. Self employed 401k loans generally have a 5 year maximum repayment term. Principal and interest is repaid back to yourself into your Self Employed 401k.

A Self Employed 401k loan can be provided tax free, penalty free and without credit checks or income qualifications and the money can be used for any purpose. The simplicity and ease of a Self Employed 401k loan is a key benefit and may be considered a valuable feature for many self employed business owners.

Securing a self employed loan is a simple 3 step process.

1. Setup a Self Employed 401k - You are permitted to setup a 401k provided you are self employed and have no full time W-2 employees other than a spouse. You are eligible to establish a 401k for a side business even if you participate in a 401k, 403b or 457 plan through your primary employer. Sole proprietorships, S and C corporations, partnerships and LLCs qualify.
    
2. Rollovers and Transfers - Existing retirement accounts can be transferred or rolled over to consolidate your retirement assets. You can rollover 401k, 403b, 457 and other previous employer's retirement plans as well as transfer Keogh, SEP IRA, Traditional IRA and IRA rollover accounts into your 401k. By consolidating your existing retirement accounts into a 401k you build the 401k's balance quickly and then can use its value as collateral to receive a larger self employed loan.
    
3. Submit Loan Request Form - Once the retirement assets have been rolled over or transferred into your 401k for 10 business days, you are immediately eligible for a loan. Using your 401k's balance as collateral you can borrow up to 1/2 of the total value of your 401k up to a $50,000 maximum.

Summary

A Self Employed 401k may be well suited for the self employed business owner who would like to maximize their retirement contributions or who would like to borrow from their retirement plan using their 401k balance as collateral via a tax free Self Employed 401k loan.

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Disclosures:

*  The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

* Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.