How can I use a $50K loan from my 401(k) as part of my EB-5 investment? - EB5Investors.com

How can I use a $50K loan from my 401(k) as part of my EB-5 investment?

I want to use a $50K loan from my 401(k) towards my EB-5 investment amount. There is a clear documentation of the funds and the source of funds is clear. However, I am not sure if a “loan”, even though I am “borrowing” from my own funds will work for the USCIS. Does it have to be a withdrawal? I would prefer not to have to pay penalties and taxes associated with a withdrawal.

Answers

Julia Roussinova

Julia Roussinova

Immigration Attorneys
Answered on

This type of loan should qualify as long as you can demonstrate by documentation that the loan is secured by the cash value of funds in your personal 401(k).

Fredrick W Voigtmann

Fredrick W Voigtmann

Immigration Attorneys
Answered on

The loan you described should qualify as a lawful source of EB-5 funds, assuming you have all of the documentation demonstrating that the funds deposited into your 401(k) were lawfully obtained.

Daniel A Zeft

Daniel A Zeft

Immigration Attorneys
Answered on

The $50,000 must be funds that you can invest in an EB-5 project.

Ed Beshara

Ed Beshara

Immigration Attorneys
Answered on

Your source of personal investment funds can be from a loan based upon your personal savings.

Barbara Suri

Barbara Suri

Immigration Attorneys
Answered on

Yes, you may use a loan that is secured by your own personal assets.

A Olusanjo Omoniyi

A Olusanjo Omoniyi

Immigration Attorneys
Answered on

You can borrow from your 401k for EB-5 purposes. However, the 401K governing rules and regulations on taxation of any early withdrawal will apply.

Charles Foster

Charles Foster

Immigration Attorneys
Answered on

Yes, you should be able to use the $50,000 loan from your 401(k) as part of your EB-5 investment amount. You would be able to establish a lawful source of funds. It would have to be withdrawn because normally upon filing your EB-5 petition on Form I-526 and the issuance of a receipt, you have to transfer the full investment amount, be it $500,000 or $1 million, into the job creating project.

BoBi Ahn

BoBi Ahn

Immigration Attorneys
Answered on

That is not a problem as long as you can document the lawful source, for example a 401K. A loan from your 401K for EB-5 purposes is fine. How you structure the loan to avoid tax consequences is something you should address with your tax advisor. As long as the transaction is legal, there is no issue for EB-5 purposes.

Michael A Harris, Esq

Michael A Harris, Esq

Immigration Attorneys
Answered on

It may be feasible, but you should consult a tax adviser. Some articles suggest taking a loan from your 401(k), which is generally allowed but very costly. The EB-5 rules require specific compliance for using proceeds from a loan. One of those core requirements are whether the loan is secured by assets that you own. The securitization process should be formally addressed and you will want to review it with an EB-5 specialist before you do anything.

Jinhee Wilde

Jinhee Wilde

Immigration Attorneys
Answered on

The loan is acceptable fund source as long as it is secured by an asset you own.

Lynne Feldman

Lynne Feldman

Immigration Attorneys
Answered on

Seek tax advice.

Blake Harrison

Blake Harrison

Immigration Attorneys
Answered on

Loans are permissible under EB-5 regulations as long as they are secured by the personal property of the investor. In this instance, the loan would be secured by the contributions made to your 401(k) account.

Belma Demirovic Chinchoy

Belma Demirovic Chinchoy

Immigration Attorneys
Answered on

It is worth exploring whether your retirement would count as a collateral. This needs research.

Phuong Le

Phuong Le

Immigration Attorneys
Answered on

It should be fine to use a loan from your 401K because you can show that your loan is backed by your actual equity or cash value in your 401K. It shouldn''t be too hard to put together the required supporting documents for this part of your source of funds, as part of your I-526 petition.

Tomas Resendez

Tomas Resendez

Immigration Attorneys
Answered on

A loan backed up by your own assets usually is enough for the U.S. Citizenship and Immigration Services to prove investment in EB-5 petitions, assuming that you can prove source of funds of the 401(k). You should talk to an immigration lawyer and explain your whole situation before submitting any documentation with USCIS.

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