Solo 401(k) Plan loan feature allows plan participants to access retirement funds tax-free and use those plan funds for business-related purposes.
IRA Financial Group, the leading provider of self-directed Solo 401(k) plans, announces the finding of an internal report that illustrates that IRA Financial Group clients continue to use the Solo 401(k) Plan loan feature to borrow money tax and penalty-free. “The Solo 401(k) plan loan feature has been a valuable tool for our retirement clients to access retirement funds tax-free and penalty-free and use the funds for business-related purposes,” stated Adam Bergman, a tax attorney with the IRA Financial Group.
A solo 401(k) loan is permitted at any time using the accumulated balance of the solo 401(k) as collateral for the loan. A Solo 401(k) participant can borrow up to $50,000 or 50% of their account value, whichever is less. This loan has to be repaid over an amortization schedule of 5 years or less with payment frequency no less than quarterly. The interest rate must be set at a reasonable rate of interest, generally interpreted as prime rate as per the Wall Street Journal. As of 9/6/13, the Wall Street Journal prime rate is 3.25%, which means participant loans may be set at very reasonable Interest rate. The Interest rate is fixed based on the prime rate at the time of the loan application.
According to Mr. Bergman, as a result of the recent economic meltdown, banks and other financial institutions have severely limited their lending capacity to self-employed business owners, thus, causing grave financial pressure on self-employed business owners. The Solo 401(k) plan is a perfect structure for any self-employed business owner seeking immediate funds for their business or to help pay personal expenses. With IRA Financial Group’s Solo 401(k) plan, plan participants can borrow up to $50,000 or 50% of their account value, whichever is less, to help finance or operate their business.
According to Mr. Bergman, “over the last four years we have helped our clients get tax-free access to over $75 million in retirement funds via the Solo 401(k) loan feature that were used for personal and business-related purposes.”
The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.
IRA Financial Group is the market’s leading provider of “checkbook control” self-directed IRA LLC retirement solutions. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate, without custodian consent.