Consolidating Retirement Plans Using a Solo 401k plan

The Solo 401k plan offers business owners the opportunity to consolidate all of their retirement savings under one umbrella. All of the following types of tax-qualified retirement savings can be rolled or transferred into a Solo 401k plan.

  • Traditional IRAs
  • SEP IRAs
  • Rollover or Conduit IRAs
  • SIMPLE IRAs
  • SIMPLE 401(k) Plans
  • 401(k) Plans
  • Profit Sharing Plans
  • Money Purchase Pension Plans
  • Defined Benefit Plans
  • Government 457(b) Plans
  • 403(b) Plans
  • Thrift Savings Plans (TSP)

For a list of retirement funds that may not be transferred to a solo 401k, VISIT HERE.

IRA Transfer QUESTION:

Am I able to roll over and consolidate all my traditional individual IRA funds to the solo401k account?

Or does old fund has to be from company 401k to be qualified to be rolled over?
Thank you, Hyun

ANSWER:

Yes the IRA and 401k rules allow for the direct rollover of IRAs to a solo 401k plan. A direct rollover is similar to a transfer in that the check is made payable in the name of the solo 401k plan for the benefit of the participant; however the funds originate from an IRA not another eligible retirement plan such as a former employer 401k plan. Also, just like a transfer, the alternative investments being transferred from the self-directed IRA to the solo 401k plan are registered in the name of the solo 401k plan for the benefit of the participant.

An individual can do an unlimited number of transfers and direct rollovers, but the rollover rules are little different. When determining the number of rollovers that an individual can do, you first have to determine if you are rolling over IRA funds or 401k funds, for example. If IRA funds are being rolled over, the individual can only do one IRA rollover to an IRA in a 12-month period. Traditional, Roth, SEP and SIMPLE IRAs are aggregated when applying the 12-month period. However, If the IRA is being transferred to an eligible retirement plan such as a solo 401k plan, the once per 12-month limitation does not apply. Same thing vice versa–that is, there are not restrictions on the number of  rollovers (indirect rollovers) from a solo 401k plan to an IRA in a 12-month period.

While there are no age restrictions for completing a transfer, direct-rollover, or rollover, beware of the RMD restriction. If you are planning to mover your retirement account (e.g., IRA and 401k) to a solo 401k plan, you first have to process the RMD from that account before moving the rest of the funds to a solo 401k plan, and no the RMD funds cannot be rolled over, transferred or directly rolled over to a solo 401k plan or another IRA.

 

 

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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