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I'm considering taking out a 401K loan from my Solo 401K (I'm both the only participant and administrator) as part of financing the purchase of my primary residence.

I know that you can borrow up to 50% of your retirement money, or a maximum of $50,000. An interest rate of prime + 1% to 2% seems to be acceptable to the IRS.

With respect to repayment period the IRS states: "A loan that is taken for the purpose of purchasing the employee’s principal residence may be able to be paid back over a period of more than 5 years. (IRC Section 72(p)(2)(B)(ii); Reg. § 1.72(p)-1, Q&A-5,-6, -7, and -8)"

... but is otherwise silent what that exactly means in terms of years duration.

My question then: what is an appropriate repayment period if 401K loan is taken for the purpose of purchasing the employee’s principal residence?

Could this be as long as 30 years, considering that the IRS would like to see a "commercially viable" interest rate. One could then apply the same logic and argue that duration should also be "commercially viable" and "available", i.e. up to 30 years.

I searched the web up and down but was not able to find anything regarding 401K loan duration when purchasing a home.

Please note that I'm NOT interested in reasons why one should NOT take out a 401K loan. I've done my research and believe the arguments against are overblown.

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