Self-directed Solo 401k Question – Can I convert my promissory note investment to my Roth Solo 401k?

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Self-directed Solo 401k Question: Sometimes it is desirable to do a Roth Solo 401k conversion when affordable. Can I convert my promissory note investment to my Roth Solo 401k?

Good question – effectively this question is asking about an in-kind in-plan Roth Solo 401k conversion. Items to Consider if You Plan to Process a Self-Directed Roth Solo 401k Pretax In-Plan Conversion in 2022 – My Solo 401k Financial

There is no triggering event to do in plan Roth conversion. Such conversion could be of cash or it could be a conversion of assets such as a promissory note.

The additional wrinkle when you’re transferring over or converting an asset in-kind via an in-plan Roth conversion is that you need to know the value of that asset and so would certainly need to have third-party documentation of the value because that’s the amount upon which there will be a tax obligation.

Just like when one converts cash from a pretax account to a Roth account and the amount of such cash is taxable, the same rules apply with respect to an asset that is being converted in-kind from a pre-tax solo 401k sub-account to a Roth Solo 401k sub-account.

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About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>

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