Watch: How to upgrade a Vanguard/Ascensus Solo 401k to support Roth and Mega Backdoor Roth contributions
Scenario Overview
Many solopreneurs previously opened a Solo 401k at Vanguard, which has since transitioned to Ascensus. If you opened your Vanguard or Ascensus Solo 401k before the end of the prior year and filed a timely tax extension, you may still upgrade the plan in 2025 to enable Roth and Mega Backdoor Roth contributions for the 2024 tax year.
Key Requirements
- Plan must have been opened with Vanguard or Ascensus before December 31, 2024
- Filed a timely tax extension for the 2024 business return
- Upgrade to a provider whose plan allows Roth and Voluntary After-tax contributions (Mega Backdoor Roth).
Deadlines Based on Business Type
- Sole Proprietor / Single-Member LLC: October 15, 2025 (1040 extended deadline)
- Partnership / Multi-Member LLC: September 15, 2025 (1065 extended deadline)
- S-Corp: September 15, 2025 (1120S extended deadline)
- C-Corp: October 15, 2025 (1120 extended deadline)
Upgrade Process
Step 1: Restate the Plan
This is not a new plan—it’s a restatement. Your existing Solo 401k plan is amended by adopting new plan documents that allow Roth and Mega Backdoor Roth contributions.
Step 2: Open New Accounts
Ascensus accounts cannot support third-party plan documents. You’ll need new accounts at a provider such as Fidelity or Schwab. We help open these accounts and ensure you have separate accounts for:
- Pre-tax
- Roth
- After-tax (for Mega Backdoor Roth)
Step 3: Transfer Funds
Cash from Ascensus is transferred to your new provider accounts. This is a non-taxable transfer from one plan account to another under the restated plan.
FAQ Highlights
How do spouses or business partners set up accounts?
- Each participant will need their own accounts
- Accounts should be labeled to help trach which is which (e.g., “John Roth”, “Jane Pre-Tax”)
- One plan, one fee—but multiple accounts per participant depending on fund type
Can different participants use different brokerages?
Yes, participants in the same plan can hold their Solo 401k funds at different brokerages (e.g., Fidelity for one, Schwab for another).
Key Takeaways
- You can still make Roth and Mega Backdoor Roth contributions for 2024 if you meet the setup and extension deadlines.
- Upgrading is done via plan restatement, not by opening a new plan.
- New accounts must be opened under the restated plan, and we help you with this process.
- Transfers from Ascensus must be in cash and are not taxable.
- Ensure account naming is clear and usage is consistent.
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