Does it make sense to borrow from a solo 401k (in today's environment) to fund a taxable trading account that employs an options strategy no solo 401k, that I know of, allows? I can grind out 8 or 9% percent a year writing options, and if I am borrowing at say at 6% and the interest goes back into my 401k, where am I losing over the five years of the 50,000K loan, especially if the solo 401k has been underperforming?
Borrowing from a solo 401k
- Thread starter UVXY20
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THAT + IRS regs are not anywhere near my favorite. But looks like they were designed not to encourage lending yourself money. [MM pays more than that gov / last i looked.]
JUST because my RE broker did not use title insurance, for investments , so i did not. any loss would been unwise. So even a permited deal may not turn out right.
SINCE brokers make money on so much stuff\ a disallow could be wise warning.
I would find a way to do better than underperform. SPY averages 12%, depending on start date.
Actually one ETF sector i like\ tends to underperform\ so i do that smallest ,so no problem
A couple of things...Are you fully funding your 401k? With the company match, it can be easy money that you don't even see. I know you are limited with the choices of investments, but find the one (or two) that you think will be winners. Example, go from a money market fund to an index fund, at the end of a recession.
As soon as you leave your job, move your 401k to an IRA...More options you can write.
But beware...Know when your start date of work was/is. Try and leave AFTER 5 years (most companies)...To be fully vested. What you think is your start date vs the company, may be two different dates!! Three times I left a company after 5 years. I got fully vested in them all. Also, if there are stock options...Know when they happen.
If home/townhouse/condo prices drop and you want to enter that market, some people will use their borrowed 401k for the down payment.
Ask trusted/smart friends what you might do...They may show you things (blind spots) you might not see.
As soon as you leave your job, move your 401k to an IRA...More options you can write.
But beware...Know when your start date of work was/is. Try and leave AFTER 5 years (most companies)...To be fully vested. What you think is your start date vs the company, may be two different dates!! Three times I left a company after 5 years. I got fully vested in them all. Also, if there are stock options...Know when they happen.
If home/townhouse/condo prices drop and you want to enter that market, some people will use their borrowed 401k for the down payment.
Ask trusted/smart friends what you might do...They may show you things (blind spots) you might not see.
geez... The thread title is... Borrowing from a solo 401k
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The one-participant 401(k) plan isn't a new type of 401(k) plan. It's a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan.
https://www.irs.gov/retirement-plans/one-participant-401k-plans
Retirement plans may offer loans to participants, but a plan sponsor is not required to include loan provisions in its plan. Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans may offer loans. To determine if a plan offers loans, check with the plan sponsor or the Summary Plan Description.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans
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The one-participant 401(k) plan isn't a new type of 401(k) plan. It's a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan.
https://www.irs.gov/retirement-plans/one-participant-401k-plans
Retirement plans may offer loans to participants, but a plan sponsor is not required to include loan provisions in its plan. Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans may offer loans. To determine if a plan offers loans, check with the plan sponsor or the Summary Plan Description.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans
You are right he/she did say solo...
I looked at some of his/her earlier threads from a few years back.
This thread made me think he was new to investing...
https://www.elitetrader.com/et/threads/vix-futures-question.353789/
They could be a professional (highly educated), but not knowledgeable about basic options at the time...