A solo 401k from My Solo 401k Financial allows for the conversion of voluntary after-tax solo 401k funds to a Roth IRA. For client’s who use  My Solo 401k Financial as the solo 401k plan document provider and use Schwab as the brokerage firm to hold the Roth IRA, the voluntary after-tax solo 401k funds can be converted internally within Schwab to the Roth IRA.

Using Schwab’s Form To Internally Move the Voluntary After-Tax Solo 401k Funds to the Schwab Roth IRA

To logistically transfer funds  electronically from the voluntary after-tax solo 401k plan brokerage account to the Roth IRA at Schwab, fill out the Schwab form titled “Move Assets from My Schwab Brokerage Account. See the following link for the Schwab form. https://www.schwab.com/resource/move-assets-from-my-schwab-brokerage-account

Submitting the Form to Schwab for the Conversion of the Voluntary After-Tax Solo 401k Funds to the Schwab Roth IRA

Return the completed form by using Secure Messaging on Schwab.com or SchwabAlliance.com or Fax to Schwab at 888-526-7252.

Our On-Line Conversion Form

After you have Schwab transfer the funds, the next step is to log the in-plan conversion on our website using link below: After-Tax to Roth IRA Conversion Form: https://www.mysolo401k.net/after-tax-solo-401k-to-roth-ira-conversion-form/ After you log the amount on our website, we will have the information we need to prepare 2024 Form 1099R. We provide 2024 Form 1099R to clients by the end of February of 2025.

COMPLIANCE NOTE:

Conversions are reported in the year that the funds are actually moved over to the Roth account. 

The solo 401k contribution rules are different from the  conversion rules. Contributions can be made by your business tax return due date plus any timely filed extension for the prior year.

In sum, the voluntary after-tax solo 401k conversion will be nontaxable regardless if  you convert the after-tax contributions that were made in 2023 or in 2024 for 2023.