Ask the Self-Directed IRA and Solo 401k Experts

I work full-time with a large employer and have a large 401(k) Plan that I want to rollover into a self-directed IRA, how do I know whether I can access my 401(k) plan funds from my current employer’s plan?

Eric Z., SC

Hi Eric,

In general, a 401(k) or Solo 401K Plan participant may take distributions following certain distribution triggering events. Generally, the 401(k) Plan documents dictate when one can take a distribution from a 401(k) or Solo 401K Plan.

Typically, a certain event, often called a “triggering event,” generally must arise before a plan participant is entitled to take a distribution from a 401(k) plan or Solo 401K Plan. The “triggering event” can vary based on the plan documents, however, the most common types of 401(k) Plan “triggering events” are:

In the event of a triggering event, the qualified 401(k) plan participant would have the opportunity to roll over the funds to an IRA, Self Directed IRA with checkbook control, or another 401(k) or Solo 401K Plan tax-free. The 401(k) plan participant would also have the ability to take a taxable distribution. In such a case, the distribution would generally be included in the plan participant’s taxable income for the year of the distribution.

Identifying what your current employer’s plan triggering events is helpful when you are looking to rollover funds tax-free to a self directed IRA or a Solo 401K Plan which offer far more investment opportunities. In general, in order for a 401(k) plan participant to take a distribution or rollover from a 401(k) Plan, a plan “triggering event” must occur.

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