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| solo 401k |
The IRS has recently
announced answers to the questions for Notice 2014-54.
Can I
roll over just the after-tax amounts in my Solo 401k account to a Roth IRA and
leave the remaining amounts in the plan (i.e., take a partial distribution of
just the after-tax amounts)?
No. Notice
2014-54 provides that each distribution from a solo 401k plan must include a
proportional share of both the pre-tax and after-tax amounts in the account. You
cannot take a distribution of only the after-tax amounts and leave the pre-tax
amounts in the plan. In order to roll over all of your after-tax contributions,
you could take a distribution of the full amount (all pre-tax and after-tax
amounts) in your account, roll over all the pre-tax amounts in a direct
rollover to a traditional IRA or another eligible retirement
plan, and roll over all the after-tax amounts in a direct rollover to a Roth
IRA.
In
addition to Roth contributions, I have after-tax voluntary contributions. I
want to roll over my after-tax contributions to a Roth IRA and roll over
earnings on my after-tax contributions to a traditional IRA. Can I do that?
Yes.
Earnings associated with after-tax contributions are pre-tax amounts in your
account. Thus, solo 401k after-tax contributions can be rolled over to a Roth
IRA without also including earnings. Under Notice 2014-54, all distribution
pre-tax amounts may be rolled over to a traditional IRA and, will not be
included in income until distributed from the IRA.
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