solo 401k loan criteria
Hello,
I have an existing loan with $20,000 balance on an employer (current) 403b.
Does that affect the loan limit on a solo 401k (not through employer)?
My plan is to take out the maximum loan amount ($50,000) from the solo 401k.
What about if I have another 403b from a different employer?
Thanks.
Paul
Permalink Submitted by Alan - IRA critic on Wed, 2019-11-20 19:43
The loan limits and IRS Regs apply per plan, and all plans of a single employer are treated as one plan. If you leave the employer with a loan, you will have to repay it within a reasonable time. Your exposure to loan repayment is generally porportional to your total outstanding loan balance rather than the actual number of loans you have. That said, carrying more than one such loan is very unusual and suggests a higher outstanding loan balance exists. Maxing out loans with multiple plans would not be advisable.
Permalink Submitted by Paul Kurz on Thu, 2019-11-21 03:09
Please clarify. If I understood your explanation correctly: because the limits and regulations apply per employer, then taking a $50,000 loan from a solo 401k (side income, not from “current” employer) while still having a $20,000 balance on a “current” employer 403b, is in conformance with IRS regulations? Many Thanks.Paul
Permalink Submitted by Alan - IRA critic on Thu, 2019-11-21 15:34
Yes, it conforms.