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By all means, if you can borrow at 5.5% and get a guaranteed return of 10%, do it. There are no risks: - lose your job? No risk there. - default of your family member's business? No risk there. - mis-estimate of your 10% return assumption? No risk there. - loss of diversification in your investments? No risk there. - risk of family alienation? No risk there.

Depends on whether the document excludes compensation prior to entry.

My main concern in reading David's post and then this one is that they might not make it obvious enough for a non-expert to recognize the heavy dose of sarcasm. In case there is any doubt, those items described as not involving any risk are, in fact, definitely possible sources of risk arising from the proposed strategy. What do they say about lending money to a friend or family? As one quote points out, "Thanksgiving Dinner tastes better when nobody at the table owes money to another person at the table."

Plus, you are taxed twice on the interest payments.

Sure. You lose tax free growth of the $10k. The 10% earnings are taxable. Your loan payments are paid with after-tax money and are not deductible. You lose tax free grown on the reduction of your 401k deferrals. Plus what David said.

what I understand (and the ERISA Outline Book 6 section VII D.2e6 says "Thus the Value of the Account Balance will include the designated Roth account" so there would be no need to calculate an RMD separately. (If it is a Roth IRA then there is no minimum distribution) so you take Value of the Account Balance and divide by the proper factor and that is the min distribution. I don't think there is a requirement you then have to then pro-rata the amount from Roth and other sources, but obviously the tax consequences are different depending on which sources you take it from.