The Roth Solo 401k rules are often confused with the Roth IRA rules. This is especially true for taking funds out of the Roth solo 401k whether as a distribution or by directly rolling the funds to a Roth IRA.
Just like pre tax employee solo 401k contributions, Roth solo 401k employee contributions are subject to strict distribution rules. If you made employee Roth solo 401k designated account (aka Roth solo 401k) contributions to the solo 401k, or made pre tax employee contributions to the pretax solo 401k and then converted those to the Roth solo 401k, then those amounts cannot be transferred to a Roth IRA if you are under age 59 1/2 even if you have had the Roth solo 401k for 5 years. Reason being, the statutory 401k rules detail that you can’t take money out (this applies to direct rollovers as well as personally receiving the funds) prior to a distributable event.
(d) Distribution limitation—(1) General rule. A cash or deferred arrangement satisfies this paragraph (d) only if amounts attributable to elective contributions may not be distributed before one of the following events, and any distributions so permitted also satisfy the additional requirements of paragraphs (d)(2) through (5) of this section (to the extent applicable)—
(i) The employee‘s death, disability, or severance from employment;
(ii) In the case of a profit-sharing, stock bonus or rural cooperative plan—
(A) The employee‘s attainment of age 59 1/2; or
(B) In accordance with section 401(k)(14), the employee‘s hardship;
(iii) In accordance with section 401(k)(10), the termination of the plan; or
(iv) In the case of a qualified reservist distribution defined in section 72(t)(2)(G)(iii), the date the reservist was ordered or called to active duty.
