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Can I Transfer Roth IRA Funds in to a Solo 401k Plan?

A Roth IRA is essentially the only type of retirement account that cannot be rolled into a Solo 401k Plan.  Traditional IRA, SEP, SIMPLE IRA (only after 2 years), 401(k) Plan, 403(b), etc funds may be rolled into a Solo 401k Plan tax-free. However, since a Roth IRA is an after-tax type of account, IRS rules do not permit after-tax accounts to be rolled in or transferred into a 401(k) Qualified Plan.  Also, most Solo 401k Plans do not permit after-tax qualified plan funds to be rolled in to the Plan, even though it is permitted by law.  The rational for such restriction is unclear, since most Solo 401 qualified plans allow for Roth sub-accounts.  Accordingly, it would make sense to allow Roth IRA funds to be rolled into a Roth sub-account, however, the IRS has not yet commented on this proposal.  Stay tuned.

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Posted in Solo 401(k)

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