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Rolling over solo 401k to roth IRA

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  • Rolling over solo 401k to roth IRA

    I previously opened up a solo 401k with TD Ameritrade with some extra moonlighting income during residency (currently in fellowship), and would like to convert it to a Roth account. After looking at the "Qualified Retirement Plan Distribution Form", it gives me the option for direct conversion to Roth IRA (which seems like the mega backdoor Roth option while skipping the traditional IRA step). Has anyone had any experience with this? And if so, are there any additional forms needed?

  • #2
    That is because the rules changed - SR can tell you how many years ago. In the days of yore, you would have had to: 1) r/o to a TIRA then 2) convert to a Roth. Now you can simply make a direct conversion.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      This is not the Mega Backdoor Roth. That is something entirely different. This is just a direct Roth rollover available for 15 years.

      Keep in mind, the tax code and IRS regulations prohibit the in-service rollover of employee deferrals prior to age 59 1/2. While the tax code and IRS regulations allow the rollover of employer contributions prior to age 59 1/2. Most 401k plans have restrictions.

      There would only be two ways to convert all of your current one-participant balances to a Roth account.
      1. Terminate the one-participant 401K plan and rollover the account(s) balances to a Roth IRA. However, you would be subject to the successor plan rule and would be unable to contribute to a new one-participant 401k plan for one-year. Also,you would want to make sure to file a final Form 5500-EZ. There are significant consequences for late filing and failure to file
      2. Amend the one-participant 401k plan to E-Trade, open both traditional and designated Roth accounts and do a trustee -> trustee transfer. Then you could do in-plan Roth rollovers (IRRs) when snd how much you chose. You would also retain a one participant 401k plan


      • #4
        Thanks both for the help. This clears it up.


        • #5
          Follow up question, so after reviewing my TDA account, I goofed and did not submit my Adoption agreement & QRP Plan Information form for 2022 for Cycle 3 Plan Restatement regulations. Do I need to submit this to TDA before I submit my Individual 401k application with ETrade?