What are my Self-Directed Solo 401k options if I am no longer self-employed?

For owners of owner-only businesses who are no longer self-employed, and wish to close their solo 401k plan,  you have two options:

Option 1:

You can either take the funds from your Solo 401k as a Taxable Distribution. If you are under 59 1/2 you will pay a 10% early withdrawal penalty along with ordinary income taxes on the amount of the distributions.   In that case, please submit the following online form to let us the information needed for the required tax reporting: CLOSING PLAN: Full Pretax Solo 401k TAXABLE DISTRIBUTION Form – My Solo 401k Financial

Option 2:

Your other option is to do a direct rollover to another qualified plan such as an IRA.  In that case, please submit the following online form to let us the information needed for the required tax reporting: Full Transfer of Pretax Solo 401k to Pretax IRA – My Solo 401k Financial  Note: If you have Roth funds, please submit the following online form: Full Transfer of Roth Solo 401k Funds to Roth IRA – My Solo 401k Financial

What Happens After I choose One of the Above Options?

A final Form 5500-EZ regardless if the value of the account was under $250,000, and a Form 1099-R will need to be issued to formally close the plan with the IRS.

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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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