After-Tax Solo 401k to Roth IRA Conversion Form

Each time you process  a conversion of AFTER-TAX solo 401k funds to Roth IRA, please complete the following on-line form.

  • If each participant is converting funds after-tax funds to a Roth IRA, please submit a separate on-line conversion form for each participant.
  • It is best to submit this on-line conversion form once you have converted/moved the funds to the ROTH IRA to ensure all gains are accounted for.
  • We will issue the Form 1099-R in February 2023 to report the conversion to the Roth IRA.

COMPLIANCE NOTE:

Conversions are reported in the year that the funds are actually moved over to the Roth account. 

The solo 401k contribution rules are different from the  conversion rules. Contributions can be made by your business tax return due date plus any timely filed extension for the prior year.

In sum, the voluntary after-tax solo 401k conversion will be nontaxable regardless if  you convert the after-tax contributions that were made in 2021 or in 2022 for 2021.

Frequency QUESTION:

I like to do monthly contributions for cash flow, dollar cost averaging and budgeting reasons. Will this be problematic or inconvenient to send money to the solo 401k then make monthly conversions to Roth IRA? Is there an automatic mechanism for this?

No issue, and you can let us know by year end the total amount converted using the above online form so that we can collect the necessary information for issuing the Form 1099-R for reporting the non-taxable conversion.

Is it Allowed:

Is it still an in-plan conversion if I moved the funds from my solo 401k After-Tax bucket into my ROTH IRA?

Yes, in that it is allowed and not taxable if there are no gains. Also, a Form 1099-R would be issued to report the conversion. In order to issue the Form 1099-R, we would need the above form timely completed.

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