Good morning,
I had one question about my scenario. I have about $25,000K in my employer 401K, which can be rolled over to a self-directed Solo 401k plan. As per our discussion yesterday, this money can be rolled over to my Solo 401k (pretax) plan and later be converted to Roth Solo 401k (paying tax on the amount converted).
My question:
1) can I keep this 25,000 in my Solo 401k (pretax) account and invest?
2) Should I pay your company extra for having both pretax and post tax account?
Thank you in advance. LK
ANSWER: Yes you can keep the $25K in pretax Solo 401k bank account and still retain option to later convert to a Roth Solo 401k.
While not all Solo 401k providers plan documents allow for Roth Solo 401k contributions our plan does, and we do not charge additional fee for converting pretax Solo 401k funds to Roth Solo 401k nor additional fees for making Roth Solo 401k contributions as it’s still the same Solo 401k plan but with a Roth option built into it. In other words, when you decide to make Roth contributions or process conversion, a separate Solo 401k bank account will need to be opened to track post-tax funds (Roth), but under the same Solo 401k name and EIN; however, you will simply have the bank add the word “ROTH” next to the name of the Solo 401k plan.
We will guide you and handle all the tax reporting when you are ready to proceed with in-plan rollover (Solo 401k Roth Conversion).
