Can I rollover my 401k from my ex-employer into the Solo 401k?
Yes. Provided you are eligible for a Solo 401k then you can rollover your 401k with a previous employer into a Solo 401k. In order to be able to rollover a 401k you must have terminated your employment. You are not permitted to rollover a 401k with a current employer.
An important feature of the Solo 401k plan is the opportunity to consolidate retirement assets. Most retirement accounts can be rolled over into a Solo 401k and if the rollover is done properly there is no tax liability. The easiest option is to do a direct rollover. With a direct rollover, you authorize your ex-employer’s administrator or current IRA custodian to make the check payable directly to the new custodian for benefit of (FBO) your name. For example, the check would be made payable to the new custodian FBO John Smith. This is sometimes referred to as a trustee-to-trustee transfer and there is no tax withholding, no taxes and no penalties with this option. Your retirement savings will continue to grow tax-deferred. In most situations, a direct rollover makes the most sense since it avoids potential tax liabilities and penalties.
What retirement accounts can be rolled over into a Solo 401k?
You can generally rollover any pre-tax retirement account into the Solo 401k. You can rollover your 401k, 403b, 457 or Thrift Saving Plan from a previous employer. You can transfer a Rollover IRA, Traditional IRA, SEP IRA, Simple IRA, Keogh and Defined Benefit Plan.
IRS rules do not permit a Roth IRA to be rolled over into the Individual Roth 401k, however you can rollover a Roth 401k into the Individual Roth 401k.
Consolidating retirement accounts is particularly important if you would like to use the Solo 401k loan provision. Other advantages of consolidating your retirement plans via a rollover into you Solo 401k are improved financial organization and ease of monitoring your retirement portfolio.
Learn more about the benefits of the Solo 401k
- Solo 401k Loans – A 401k loan up 50% of the total value of the 401k up to a maximum loan of $50,000 is permitted with a Solo 401k plan.
- Solo 401k – Information, Rules and Frequently Asked Questions about the Solo 401k.
- Solo 401k Eligibility – Learn about the eligibility rules and find out who is eligible and who is ineligible to establish a Solo 401k plan.
- Solo 401k Contribution Limits – 2021 contribution limit of $58,000 and $64,500 if age 50 or older. View contribution limit examples for a sole proprietorship, partnership, LLC, S corporation and C corporation.
- Solo Roth 401k – There is an option to make Roth 401k contributions with the salary deferral portion of the Solo 401k. Contributions into a Roth 401k are not tax deductible, but withdrawals are tax free after age 59 ½.