Can I transfer funds held in a Traditional IRA into the After Tax Solo 401k account?

No, traditional IRA funds, whether pre tax or non-deductible IRA funds are not allowed to be transferred to the voluntary after-tax solo 401k as the IRA rules do not allow for it.  However, a traditional IRA solely consisting of pretax IRA funds may be converted to the Roth Solo 401k which would entail working with your current IRA custodian in processing the taxable conversion of the pretax IRA funds to the Roth solo 401k where they would make a check payable in the name of the Roth solo 401k which they would then mail to you for deposit into the solo 401k plan. The IRA custodian would not perform any tax withholding on the pretax IRA conversion to the Roth solo 401k but you would have to pay the federal taxes due on the conversion by your personal tax return due date. Also, the pretax IRA custodian will then issue a Form 1099-R by January of the following year in which the conversion transpired with a copy sent to you and a copy filed by the IRA custodian with the IRS.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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