In 2017, we have seen a growing number of millennials seeking to use the 401(k) loan option as a way to finance the purchase of a primary residence, which in many cases is their first home purchase
New York, NY (PRWEB)
May 30, 2017
IRA Financial Group, the leading provider of solo 401(k) plans for self-employed and small business owners, has seen a growing number of millennials who are first time home buyers using the 401(k) plan loan feature to purchase a home, according to an IRA Financial Group internal report. Internal Revenue Code Section 72(p) allows an individual 401K Plan participant to take a loan from his or her 401K Plan so as long as it is permitted pursuant to the business’s 401K Plan documents.
A solo 401k loan is permitted at any time using the accumulated balance of the solo 401k as collateral for the loan. A Solo 401(k) participant can borrow up to either $50,000 or 50% of their account value – whichever is less. This loan has to be repaid over an amortization schedule of five years or less with payment frequency no less than quarterly. However, in the loan proceed will be used to purchase a primary residence, the term of the loan could be extended to a longer term, generally fifteen or thirty years. The lowest interest rate that can be used is prime as per the Wall Street Journal, which as of May 30, 2017 is 4.00%. “In 2017, we have seen a growing number of millennials seeking to use the 401(k) loan option as a way to finance the purchase of a primary residence, which in many cases is their first home purchase,” stated Adam Bergman, a partner with the IRA Financial Group.
With IRA Financial Group’s Solo 401K plan loan feature, an…