Solo 401k Promissory Note Interest Rate

QUESTION

What sort of documentation do I need to structure for a promissory note loan from my solo 401k to an unrelated 3rdparty? I can set the interest rate and term correct?

ANSWER:

Yes you can set the terms of the solo 401k promissory note investment.  The interest rate needs to be a rate that will benefit the solo 401k plan. One common approach is to look at the borrowers credit to determine the interest rate, as the point of the promissory note investment is to benefit the solo 401k plan not the third-party.

For more information on the promissory note rules, CLICK HERE.