The 5-Year Roth Solo 401k Rule Rollover to a Roth IRA

Make sure to familiarize yourself with the Roth IRA 5 year rule before proceeding to move Roth solo 401k funds to a Roth IRA. Roth solo 401k funds  moved to a Roth IRA will always use the 5-year holding period associated with the Roth IRA.  The existing holding period accumulated in the Roth solo 401k retirement plan will be lost.


Bill has had a self-employed Roth solo 401k plan for 9 years. He opened a Roth solo 401k plan as soon as the Roth component first became available it in 2007. Bill has finally decided to stop being self-employed and is age 62. Even though Bill can take qualified distributions from his Roth solo 401k since he is over age 59 1/2 and his Roth solo 401k plan has been held for more than 5 years, he has decided to instead l move his Roth solo 401k assets to a Roth IRA. Bill is opening a Roth IRA for the first time in 2017.  When he moves his Roth solo 401k assets to his newly established Roth IRA, they will all go in as basis. As a result, Bill will not be able to take qualified distributions of his Roth IRA earnings, because the 5-year holding period will be determined by the time he has had a Roth IRA. The holding time that had accumulated in the Roth solo 401k plan will be lost.  However, Bill will be able to distribute the basis tax and penalty free because all funds go into the Roth IRA as basis and are available for distribution tax and penalty free.

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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