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Transfer an Indirect Rollover from My Former Employer 401k to my Solo 401k
QUESTION:
A former employer closed their plan and sent me a check (with tax withholding included) and I’d like to deposit it into my pretax solo 401k with Fidelity. I suspect I have 60 days from receipt to do this without tax consequences. What are my options?
RESPONSE:
Option 1: You have to first deposit the check into your personal bank account. You then have 60 days from the date that you received the check to deposit it into your solo 401k account (plus the additional 20% withheld). When you deposit the funds into your solo 401k account, you will need to make the new check payable in the name of the solo 401k, write “rollover” on the memo section of the check, and deposit the check.
Option 2: Don’t deposit the check that you received from your former employer and instead ask them to place a stop payment on the check. Then ask them to make it payable in the name of the solo 401k. If made payable in the name of the solo 401k instead of solely in your name, they won’t withhold any taxes and you will be able to transfer the entire amount directly into the solo 401k.
