The owners and their family might face serious financial challenges if without a proper backup plan
Los Angeles, CA (PRWEB) November 20, 2014
On October 23, 2014, BBC pointed out in an article that by 2013, older adults in the US owe $18.2bn in federal student debt, according to a report by the Government Accountability Office (GAO). This presents a growing problem to senior citizens, adding on to the financial burden of financial planning, increasing medical expenses, and no or much lower income during retirement age.
Due to the financial burdens, the article also stated, people over 65 are more likely to default on their student loan than other group. Failing to pay back student loan can affect a senior’s social security benefit. Student loan cannot be forgiven either even if the borrower files for bankruptcy.
Considering this major issue, Sense Financial suggests that for plan holders of a Solo 401k, the loan feature can help alleviate the problem. Senior citizens who were self employed business owners or independent contractors can rely on Solo 401k loan to help pay for their debt.
With a Solo 401k loan, plan holders can borrow up to $50,000 or 50% of the account’s total value, whichever is less. The loan is tax free and penalty free, as long as the principal and interest is paid back within 5 years and at least on a quarterly basis.
By using Solo 401k loan, the plan holders can switch to a low interest of Prime plus 1%. This can potentially be lower than the current interest of the student loan. The best thing is that all principal and interest will be paid back into the Solo 401k plan. So instead of paying interest to a lender, the plan holder can keep growing their retirement fund.
With a Solo 401k loan, the borrowed amount can be used for any reason and the approval process is much easier than a traditional bank loan. Because of these features, using a Solo 401k loan can offer a temporary relief from student loan pressure, save them on interest payment, while keep the fund growing from interest payment.
Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients to obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.
To learn more about Solo 401k, please visit sensefinancial.com