Participant loan
Loan from a Solo 401(k) plan to its participant, capped at the lesser of $50,000 or 50% of vested balance.
Definition
A participant loan is a loan the plan makes to its participant under IRC Section 72(p). The maximum is the lesser of $50,000 or 50% of vested account balance. Repayments must be at least quarterly and the loan must be repaid within 5 years (longer for principal residence). A missed quarterly payment can trigger a deemed distribution. Form 5500-EZ reports both the year-end loan balance and a during-year loan indicator.