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Can I rollover IRA Funds from an IRA to a Solo 401(k) Plan?

In general, an individual with an IRA is permitted rollover existing IRA funds to a new Solo 401(K) Plan.  The IRA rollover can be in cash or in-kind assets, such as real estate or notes.   The IRS allows IRA holders to rollover IRA funds and assets in a 401(k) qualified retirement plan.  Note – Roth IRA funds cannot be rolled into a Solo 401(k) Plan.  There are a few important items the IRA holder must consider when deciding how to complete the IRA Rollover to a Solo 401K.

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First,the individual must be eligible to establish a Solo 401(k) Plan.  A solo 401K plan is also known an individual 401k plan or self-employed 401(k) Plan.  To be eligible to adopt a Solo 401(k) Plan, the individual must be self-employed and not have any full-time employees (over 1000 hours for the year), other than owner(s) and spouses.

Second, the new Solo 401(k) Plan must be a plan that can accept a rollover funds.  Most Solo 401(K) Plans will accept rollover of cash from an existing IRA, however, very few solo 401(K) Plans will accept rollovers of in-kind assets, such as real estate.  In such a case, the new Solo 401(k) Plan and 401(k) Plan custodian would need to accept the in-kind transfer of real estate.  Not all Solo 401(k) Plans accept the rollover of real estate into the Plan.  Note – IRA Financial Group’s Solo 401(k) Plan accept the rollover of in-kind assets, such as real estate.

Thirdly, the in-kind rollover should be handled by a tax professional, since the real estate would likely need to be re-titled into the name of the new 401(k) Plan.

In sum, the IRS allows an IRA holder to rollover his or her existing IRA funds to a new Solo 401(k) Plan without incurring any tax or penalties.  It is important to make sure that the Solo 401(k) Plan is established by tax professionals and that if you will be rolling over in-kind IRA assets (i.e. real estate), the new Solo 401(k) Plan will accept the rollover.   The tax professionals at the IRA Financial Group will help you roll your existing IRA funds in to an IRS approved Solo 401(k) Plan without tax or penalty.  The new Solo 401(k) Plan can be opened at any local bank or credit union.  Furthermore, your assigned tax professional will assist you in completing the IRA rollover, including real estate, to the new Solo 401(K) Plan and make sure the rollover is completed within IRS guidelines.

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To learn more about the benefits of a Solo 401K rollover as well as understand the rollover rules in greater detail, please contact a retirement expert at 800-472-0646

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Posted in Self-Directed IRA, Solo 401(k)