In-Plan Roth Solo 401k Conversion of equities–Stocks and mutual funds, for example

The conversion of pretax solo 401k funds to the Roth solo 401k designated account does not have to be done in cash. Pretax solo 401k funds including equities such as stocks and index funds may be converted to the Roth solo 401k. This is referred to as an in-plan Roth solo 401k conversion of an asset. 

When the stock market has taken a dump like it has this year, it may be a good time to convert equities such stocks held in your pretax solo 401k to the Roth solo 401k designated account, as taxes will be owed on the value of the stock at the time of the conversion. 

Once the market conditions turn green again, the equities now held in the Roth solo 401k designated account stemming from the in-plan/in-kind conversion of the pretax solo 401k will grow tax free. 

Form 1099-R Reporting

Whether cash or stocks are converted from the pretax solo 401k to the Roth solo 401k designated account (in-plan conversion of pretax funds), the Form 1099-R reporting is the same.  The conversion is taxable at the federal level, and depending on your state of residence,  state taxes also apply. Both the federal and the applicable taxes are paid with non solo 401k funds so personal funds when you file your personal tax Form 1040 return, for example.


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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