When a solo 401k owner transfers funds from an after-tax solo 401k to a Roth IRA, it is important to note that this transaction is reportable to the IRS. The plan will issue a Form 1099-R to report the transfer, and the Roth IRA provider will issue a Form 5498 to report the rollover contribution.
- Form 1099-R is used to report distributions from retirement accounts, including the conversion of after-tax contributions from a Solo 401(k) to a Roth IRA. This form will detail the amount converted and any taxable amounts, if applicable. The 1099-R form should indicate the rollover with the appropriate code, such as code “G” for direct rollovers.
- Form 5498, on the other hand, does not apply to Solo 401(k) plans as it is specifically for Individual Retirement Accounts (IRAs). This form is used to report contributions to IRAs, including rollovers and conversions; therefore, the solo 401k provider does not issue Form 5498, but the Roth IRA custodian will issue it.
