Can I transfer a Roth IRA to 401k or Solo 401k?

October 7, 2014 | By Mark Nolan

QUESTION: I want to transfer my Roth IRA with Equity Trust to your solo 401k. Can you please provide guidelines for processing it as a direct rollover?

Regards, Dawn in FL

ANSWER: While the 401k regulations allow for annual Roth 401k contributions, the regulations do not permit for the transfer of Roth IRA funds to a 401k, whether a 401k for the self-employed such as a solo 401k, or a traditional 401k for full-time employees. Moreover, the regulations further restrict the transfer of a Roth IRA to the designated Roth account portion of the 401k (commonly referred to as a ROTH Solo 401k or Roth 401k).

The restriction with respect to not being allowed to transfer or direct rollover a ROTH IRA to a 401k is listed in IRS Publication 590-A. CLICK HERE to read about this restriction.

QUESTION:

I was under the impression that if the roth money is originally from a qualified plan it can still be contributed to the solo 401K, but it if it a native ROTH IRA at origin it could not.

Is that not correct?

ANSWER:

Even if the Roth IRA had been funded/ opened via a direct rollover from a previous employer plan such as a Roth 401k or Roth 457b, for example, the Roth IRA cannot later be transferred to a qualified plan including a roth 401k such as a roth solo 401k.

Essentially, once the funds are in the Roth IRA, the Roth IRA rules apply.

Deposit Covid 19 Related Distribution of Roth IRA to Funds to the Roth Solo 401k :

I withdrew 62k from a Roth IRA under the Covid-19 year 2020 exception so my question is can I recontribute this amount to my Roth solo 401k?

No, as the Roth IRA rules do not allow for the contribution of Roth IRA funds whether stemming from a Covid-19 related distribution or not to a Roth solo 401k. This is a Roth IRA rule.

Can a Roth IRA Distribution be Deposited or Rolled Over to a Solo 401k QUESTION:

I understand from your information above that a Roth IRA cannot be rolled over to a 401k including a Roth solo 401k, but what if I first distribute the funds from the Roth IRA and then deposit them into the Roth solo 401k ?

Unfortunately, just like the IRS rules restrict the direct rollover of a Roth IRA to a 401k including a Roth designated solo 401k, the rules also do not allow for the Roth IRA funds to be indirectly deposited to the Roth solo 401k. The same restriction applies even if the Roth IRA solely contains Roth funds attributable to a rollover from a prior employer plan. Don’t confuse this rule, however, with the transfer of Roth funds in a former employer plan such as a 401k, TSP, 457b, and 403b, for example, as designated Roth funds in plans may be transferred to a Roth solo 401k. Click here to read more IRS information on the Roth IRA transfer restrictions found on page 2.