401K transfer to borrow help

[Maria Muniz]

Does anyone know what type of account you can transfer your 401k to, and then borrow from it/ pull from it? Without any penalties? I know I heard it’s possible, I just can’t seem to find out the right way to go about it. I tried calling fidelity and it wasn’t any help.

[Huyen Ngo]

If you open a Solo 401K account, you can pull a participant loan up to $50K; but if you are borrowing for a primary residence, I believe you can pull out more because you are using it for a primary residence. I opened a Solo 401K account myself and pulled a participant loan. I used those funds to start my real estate business as a Realtor. :)

[Srini Murthy]

Quote from @Maria Muniz:

@Matt Devincenzo isn’t there penalties for taking out of your 401k early, though?

 Not if it a loan as you will be paying it back

[Dorothy Butala]

Quote from @Huyen Ngo:

If you open a Solo 401K account, you can pull a participant loan up to $50K; but if you are borrowing for a primary residence, I believe you can pull out more because you are using it for a primary residence. I opened a Solo 401K account myself and pulled a participant loan. I used those funds to start my real estate business as a Realtor. :)

A Solo K is a great option to be able to do loans for those who have reported self employed income and no employees. The max a loan can be is 50k or 50% of the value of the account. The nice thing about these is there is no restriction on the funds usage (unlike a self directed IRA). Using funds for primary residence purchase increases the payback rule of 5 years to 15, but the 50k/50% rule still applies. Great point brining up the Solo K! 

[William Goodlett]

  @Maria Muniz you can just use your 401 k if its self directed or if your company allows it. They will ask if its for investment, buying a home ...etc. The reason will be to determine the interest rate they will charge for borrowing the money. I've done this two times. Some will let you borrow up to $10k the first time you borrow no matter how much you have in there. Then its a percentage of what you have on the other times you borrow money. Not sure if anyone else mentioned this. I only read your post. 

[Jeffrey Dixon]

You can use a Solo k if you are self-employed with your own business. That business and any other business you are an owner of cannot have other full time employees. If you are not self-employed you can only move to an IRA. No IRA allows you to take a personal loan from it.

[Marc Howard]

@Maria Muniz 

You can transfer your 401k to a self-directed IRA without penalties. Once it's in the self-directed IRA, you can use the funds for various investments, including real estate.

However, borrowing directly from the account or pulling money out might not be penalty-free. solo401k.com is my service--but def do your own homework.

[Chris Seveney]

Quote from @Maria Muniz:

Does anyone know what type of account you can transfer your 401k to, and then borrow from it/ pull from it? Without any penalties? I know I heard it’s possible, I just can’t seem to find out the right way to go about it. I tried calling fidelity and it wasn’t any help.

 @Brian Eastman may be able to add some color

[Patty C.]

Quote from @Maria Muniz:

Does anyone know what type of account you can transfer your 401k to, and then borrow from it/ pull from it? Without any penalties? I know I heard it’s possible, I just can’t seem to find out the right way to go about it. I tried calling fidelity and it wasn’t any help.

I have a non-profit employer version of the 401(K) and "yes" you can borrow from it if your money is with a vendor that allows it.  Sounds like Fidelity does not allow it with your employer. I borrowed from my 403(B) in 1999: It was fortunate timing because the tech stock market crash happened shortly after. 

Contact your employer and ask if they know if any of their vendors allow for the loan provision. You can also call the vendors from your employer's vendor list. Also, ask co-workers. Not that many people know they can borrow from these plans. You can borrow up to 50% of what you have with the vendor up to $50K maximum. If you use the money as a down payment for your primary residence, you get 5 years to pay it back. (The vendor for us at the time was VALIC...would not use them if not for the loan provision.)

Here are a couple of links for information:

https://www.irs.gov/retirement...

https://www.investopedia.com/a...

Good fortune to you.

[Mary Jay]

Quote from @Carlos Ptriawan:

if you still work -> take loan , max 50k, interest is 5.5%. It's 100% online, you can even cash it out tomorrow.
if you no longer work there --> self directed IRA.

I do this all the time every 5-6 years or so.

Are you allowed to borrow from a self directed IRA? I thought no IRA plans allow it..How do you borrow from the self directed IRA?

[Mary Jay]

Quote from @Dorothy Butala:

@Maria Muniz sounds like you are looking for info on a self-directed IRA. The big brokerages (think ones that deal in stocks and mutual funds) rarely have the ability to be self directed. There are other places like Midland Trust, Equity Trust and some others that solely deal in the self-directed space. Are you looking to be a private money lender, lend to investors as a passive investor or use the money yourself?

Hi, you seem to know a lot about IRA's
I would like to lend money from my IRA but have a few questions:
1) Which company do you recommend?
2) Can you lend to relatives?
3) Can you lend to your own LLC?
4) Is there a max on how much can you lend from your IRA/self directed IRA?
Thank you!

[Dmitriy Fomichenko]

Quote from @Mary Jay:

Quote from @Carlos Ptriawan:

if you still work -> take loan , max 50k, interest is 5.5%. It's 100% online, you can even cash it out tomorrow.
if you no longer work there --> self directed IRA.

I do this all the time every 5-6 years or so.

Are you allowed to borrow from a self directed IRA? I thought no IRA plans allow it..How do you borrow from the self directed IRA?

Not possible to borrow from an IRA. Can take a participant loan from a 401k if the plan allows, I believe that is what Carlos was referring to.

[Dmitriy Fomichenko]

Quote from @Mary Jay:
I would like to lend money from my IRA but have a few questions:
1) Which company do you recommend?
2) Can you lend to relatives?
3) Can you lend to your own LLC?
4) Is there a max on how much can you lend from your IRA/self directed IRA?
Thank you!

1) As provider I'm not allowed to make a recommendation per BP policy, but do your research, talk to top 3 providers and then make your decision. 
2) You can't lend to immediate family members, they are considered "disqualified" by the IRS.
3) Can't lend to your own LLC, it is also considered disqualified 
4) You can lend 100% of your IRA balance.

[Mary Jay]

Thank you!