Roth Solo 401k Distributions at a Glance | Qualified Roth Solo 401k Distributions

As long as distributions made from a Roth Solo 401k designated account are considered qualified Roth solo 401k distributions, they will not be subject to taxation nor will penalties apply.

To qualify as a qualified distribution, the following two Roth solo 401k distribution requirement must be first satisfied:

  • Takes place at minimum 5 years after the first designated Roth Solo 401k contribution was applied to the designated ROTH Solo 401k account, and
  • The distribution is made:

On or after the owner-only employee (solo 401k participant) attains age 59 ½

As a result of the business owner’s disability, or

On or after the business owner’s death.

Applicable Regulation Code Sections

IRC § 402A , IRS Notice 2005-95, Treas. Reg. §1.401(k)-1(f)(1), Treas. Reg. §1.401(k)-6, Treas. Reg. §1.401(m)-5, Prop. Treas. Reg. § 1.403(b)-7(a), Prop.Treas. Reg. § 1.403(b)-5(b)(1)

Miscellaneous Information

If the Solo 401k Roth distribution is made before the above rules have been satisfied, it will be deemed non-qualified, resulting in taxes and early distribution penalties may apply to the gains.

The sequential distribution rules that apply to Roth IRA distributions do not apply Roth Solo 401k contributions.

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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