Self-Directed 401k FAQ – How can I convert my Private Equity Investment to my Roth Solo 401k?
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Self-directed 401k FAQ – I have a private equity investment within my solo 401(k). I’m considering doing a Roth conversion by creating a Roth solo 401(k). What are the steps I need to take to convert?
RESPONSE:
So first of all, the ability to invest in alternative investments is one of the top reasons the clients have accounts with us.
In addition, the ability to have Roth solo 401(k) investments is another top reason that clients have accounts with us.
It is certainly possible to do AN in-kind in-plan Roth conversion where a particular asset that is held inside of a pretax solo 401(k) account is converted to a Roth Solo 401k account.
As part of that process, a Roth Solo 401k account will need to be set up because ultimately, for example, any returns on that investment (e.g. dividends) will need to go back to that Roth solo 401(k) account.
The conversion will also have to be reported on Form 1099R and we have a form where the client let us know about that transfer from a Pre-tax Solo 401k to a Roth Solo 401k. On that form, clients have to let us know the value of the particular asset because it is taxable.
Please see the following page for more information: Items to Consider if You Plan to Process a Self-Directed Roth Solo 401k Pretax In-Plan Conversion in 2022
