Self Employed 401k Loan

The “Self Employed 401k” is a term commonly used to refer to the Individual 401k. One of the benefits of a Self Employed 401k versus other self employed retirement plans is the ability to receive a loan using the 401k's balance as collateral. 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.

Self employed 401k loans are permitted up to 1/2 of the total value of the Self Employed 401k up to a maximum loan of $50,000. 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 Self Employed 401k you build the 401k's balance quickly and then can use its value as collateral to receive a larger self employed loan.

A Self Employed 401k loan is very valuable because it can serve as a financing tool to provide capital to finance such things as the startup of a business, to consolidate debt, to pay for college expenses or for unexpected emergencies.

Securing a Self Employed 401k 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.

Learn more about a Self Employed 401k loan.