Non-conforming loan refi- Solo 401K

7 Replies

I have a 2 part question:

1. Can you refinance a non confirming loan (its currently a 7 year balloon) We will full payment in 5-6 more years. If yo can refi, any suggestions on with whom?

2. I want o take my old 401k (I don't work there anymore) and put it in a solo 401k. I currently self employed as a real estate agent with Redfin and I own a sole LLC (but there is nothing inside it and not making any money) can I use my regular W2 job to add funds into a solo 401k? What happens if I become not self employed?

I researched and am getting conflicting info! Thanks so much!

Kristen,

You should be able to refinance your loan, check your loan documents to see if there are any prepayment penalties. Are you talking about loan on your personal property or a property held in a Solo 401k?

You can only make contributions to your Solo 401k from self-employed earnings. You CANNOT contribute earnings from your W2 job into Solo 401k. Just having an LLC does not make you self-employed. You must have legitimate business or self-employment activity that generates earned income to qualify for the Solo 401k.

Consider self-directed IRA instead. 

@Kristen Chapin To add to what @Dmitriy Fomichenko said, your contributions to the Solo K are dependent on your earnings (from self employment).  As long as you have legitimate self employment income you should be able to open a Solo K. As soon as the Solo K is open you can roll your old 401(k) money into the new Solo K.  Once the plan is open and funded there is no requirement to continue making contributions, earning income, or to keep the business open.

If a business that sponsors a solo 401(k) ceases operations, then it is no longer capable of acting as plan sponsor. The plan must then be terminated and rolled over to an IRA or another 401(k). In certain corporate formats (not sole props or LLC's) it is possible to leave a business registered but mothballed and hold a "frozen" 401(k), but that is a rare exception and certainly not something we would encourage someone to pursue with intention.

@Brian Eastman Thanks for the clarification!  Most of the Solo 401(k)s I see are for consulting income from sole props and for practicality we roll them into IRAs after they've served their purpose. I've got a question on a point you made but its getting off track. I'll DM you.

Thanks so much for the clarification. This was more helpful then 2 hours on Google yesterday! I did look at the loan documents and it appears you can pay more as long as y ou tell them in writing beforehand or something. I will call them to confirm.