IRA Ropllover to Employer Sponsored Plan
I am encouraging a prospective client to roll all of his traditional IRA accounts into a (self-employed) employer sponsored plan so that he is eligible to convert his after tax IRA account to Roth. What plans are eligible, as employer sponsored , to receive these IRA funds? Can we use a SEP with very low administrative expenses or fees or do we have to use a Profit Sharing or Defined Contribbtion plan?
Permalink Submitted by Alan Spross on Tue, 2007-10-16 03:26
You cannot use a SEP IRA for this purpose because the SEP IRA balance must be included with other TIRA assets to determine how much of the conversion is taxable.
However, a solo 401k plan containing provisions to accept incoming rollovers could be used for this purpose.