If you’re self-employed and saving for retirement through a Solo 401(k), you may be wondering: What happens to my plan once I retire? Do you have to shut it down? Can you still keep your investments? And what about distributions—are they taxed, or can they be rolled over somewhere else? Let’s walk through your options.
Watch: Find Out if You Have to Closed Your Solo 401k When You Retire
Can You Keep Your Solo 401(k) in Retirement?
The short answer: Yes, you can.
Retirement doesn’t necessarily mean you have to close your Solo 401(k). As long as you’re still engaged in some form of self-employment—even part-time consulting or side gigs—you can continue to maintain your plan. You’re not required to keep making contributions, but the plan can remain active, allowing you to manage investments and enjoy tax advantages.
However, if you permanently cease self-employment, you can no longer sponsor a Solo 401(k). At that point, you’ll need to either close the plan or roll the funds into another retirement account.
Required Minimum Distributions (RMDs)
Like traditional IRAs and employer 401(k)s, pre-tax Solo 401(k) funds are subject to RMDs starting at age 73.
Roth Solo 401(k) accounts, however, are not subject to RMDs, just like Roth IRAs. That means your tax-free Roth funds can continue to grow untouched for as long as you live.
Options If You Stop Self-Employment
If you decide to fully retire and end all self-employment activity, here are your choices:
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Roll Funds Into an IRA
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Transfer pre-tax funds to a traditional IRA.
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Move Roth funds into a Roth IRA.
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If your Solo 401(k) holds alternative assets like real estate, private equity, or cryptocurrency, you’ll likely need to transfer them into a self-directed IRA to maintain those investments.
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Transfer to a Former Employer’s 401(k)
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If you still have a 401(k) with a past employer, you may be able to roll your Solo 401(k) into that plan. This can provide added federal-level creditor protection.
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Convert to Roth
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Pre-tax Solo 401(k) funds can be converted into Roth accounts if you prefer to pay taxes now in exchange for tax-free growth and withdrawals later.
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Take a Distribution
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While this is technically an option, it’s usually the last resort since distributions from pre-tax funds trigger taxes (and potentially penalties if you’re under 59½).
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Handling Participant Loans
If you’ve taken a participant loan from your Solo 401(k), things get tricky at retirement.
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Loans must be repaid—otherwise, the outstanding balance will be treated as a taxable distribution.
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If the loan came from Roth funds and you meet the age and five-year requirements, the distribution may not be taxable.
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Keep in mind, IRAs do not allow participant loans, so you can’t roll loans into them.
Spousal Participation & Beneficiaries
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If your spouse is part of the plan and continues self-employment, the Solo 401(k) can remain open—even if you personally retire.
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Upon your death, a spouse beneficiary can roll inherited Solo 401(k) funds into their own IRA or Solo 401(k), depending on their situation.
Important Compliance Requirements
Closing a Solo 401(k) isn’t as simple as withdrawing funds. You must file the proper IRS forms, including:
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Form 1099-R (to report distributions or rollovers)
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Final Form 5500-EZ (to officially terminate the plan, regardless of its balance)
Failing to file these forms can lead to steep IRS penalties—up to $250 per day.
Key Takeaways
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You don’t have to close your Solo 401(k) when you retire, as long as you keep some self-employment activity.
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Pre-tax funds are subject to RMDs at age 73; Roth funds are not.
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If you permanently retire, your funds can be rolled into an IRA (traditional, Roth, or self-directed) or even a former employer’s 401(k).
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Outstanding loans must be repaid, or they become taxable distributions.
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Always file the required forms when closing your plan to avoid penalties.
Final Thoughts
Your Solo 401(k) doesn’t simply vanish when you retire—it comes with choices. Whether you want to keep it open by doing part-time work, roll it into an IRA for continued tax advantages, or pass it on to a spouse, you have flexible options. The key is proper planning and compliance so that your retirement savings continue working for you.
