QUESTION:
I have a client that will have an IRA with an account value equal (or close) to the basis (via non-tax-deductible IRA contribution).
Can they do an incoming rollover of that IRA account/ those assets into the after-tax solo 401K sub-account? And then potentially do a Roth conversion within the plan once deposited?
ANSWER:
While the non-deductible IRA basis cannot be transferred to a 401k including a solo 401k or the voluntary after-tax portion of the solo 401k because the IRA rules do not allow it, the earnings in the nondeductible IRA may be transferred to the pre tax solo 401k. This would then allow for the non deductible IRA basis to be converted to a Roth IRA provided the non-deductible IRA(s) are closed.
This would get you to the same place but in a Roth IRA instead of the Roth solo 401k.
