Good 60-Day Rollover from a Solo 401k Plan Questions


Can I withdraw funds from my solo 401k and then put them back within 60 days without being hit by the IRS with taxes and penalties?


Good question and the answer is no because 20% of federal taxes has to be withheld even if rolled over within 60 days.


I have a lot of questions on this front.

I guess the rules are different for a 401k than an IRA in that respect? Fidelity wrote me a check for the entire amount of my rollover IRA and did not withhold any taxes. They just asked me to affirm some statement that relieved them of that responsibility. I think.


Correct that the 20% mandatory federal tax does not apply to IRAs but it does to 401k plans.

See following link regarding this rule:


I assume I would get that withholding back when I file my tax return. Would the withholding amount be treated like any other estimated tax payment at that time? I would be allowed to go ahead and make up for the withholding from other funds when I deposit back into an IRA or a qualified plan, right?


You  will get back some of the withholding if you don’t owe any other income tax as the 20% is treated as tax on earned income. Therefore, yes the 20% can be viewed as an estimated tax payment. Yes you can make up the 20% from your personal funds if timely rolled over within 60 days.


Under what conditions is the 20% withholding required? Is it only for in-service withdrawals? Or are all distributions from 401k plans required to withhold 20%? Is the age of the account holder relevant?


Generally only death and required minimum distributions (RMDs) are not subject to the mandatory 20% federal tax withholding. See the following link:


How about this strategy for fun? A direct rollover from 401k into IRA, then a distribution of the IRA with no withholding, then 60-days later a deposit back into the 401k?


Yes that would be allowed and the 20% withholding would not apply.


Solo 401k Distributions

Solo 401k Death Distributions

Solo 401k Required Minimum Distributions

Solo 401k Deadlines

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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