Money from Solo Roth 401k to Use in Emergency, Sense Financial Explains How

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Accessing retirement funds from the Solo Roth 401k for emergency purposes is possible. Sense Financial, the leading provider of Solo 401k, discusses how money from retirement plan could be used in times of need.

All these methods will greatly affect the retirement money because any amount taken from the plan loses its potential gains. Doing any of the above methods requires critical planning and decision-making.

It is always recommended to leave retirement savings like a Solo Roth 401k untouched, make regular contributions and max it out as much as possible, and wait for it to grow so that retirees could get the most out of their funds. However, there are emergency circumstances where people may need immediate cash and not everyone has access to savings for emergency situations.

Sudden separation from work, medical expenses of a family member, funeral expenses, and education expenses could be some of the reasons where it is possible to access money from the Solo Roth 401 k plan. Here are some details on how an individual can obtain cash from their retirement plans:

  • Use the Solo 401k loan feature. Loan taken from a retirement plan is tax free and doesn't require a qualified reason to get approved. However, the amount of the loan must not exceed $50, 000 or half of the account balance, whichever is less. Loan repayment must be made in substantially equal installments that include the interest rate plus the principal amount and must be completed within 5 years. The normal interest rate of the loan is around 1% to 2% above prime which is also paid to the retirement plan. Repayment terms must be followed accordingly so that no tax or penalty will be charged on the account.
  • Withdraw money from retirement savings. If loan is not possible, early withdrawal of funds from the self-employed roth 401k plan is an alternative, though not a good strategy. Withdrawal of contributions from a roth account is always tax free, provided that the amount will not exceed the total amount of contribution, else, tax and penalty will be charged. To compensate for the loss caused by early withdrawal, account holders should increase their contribution once they are capable because unlike loans, withdrawal doesn’t have repayment terms.
  • Hardship withdrawal for a real emergency situation that requires immediate and heavy financial needs. If emergency arises and there are no other means to finance the situation, then this could be the last resort. Qualified immediate and heavy needs are medical expenses, purchase of a principal residence, tuition fee and educational expenses, payments to prevent foreclosure on a principal residence, funeral expenses, and house repair expenses. An individual can have access to hardship withdrawals from their Solo Roth 401k account once the existence of a need has been determined as well as the amount needed to finance the need.

Bear in mind that all these methods will greatly affect the retirement money and the future of the participant’s retirement, because any amount taken from the plan leaves the account and therefore loses its potential gains. Doing any of the above methods requires critical planning and decision-making.

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 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 information about Solo 401(k) for self-employed real estate agents, please visit

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Jessica Santo - Retirement Accounts with Checkbook Control
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