Solo 401K/Roth Conversion Plan Question
relevant accounts:
Solo 401K — currently under $250k
Deductible IRA
non-deductible IRA
2010 – partial rollover of Solo K to deductible IRA at 59.5 to keep balance under 250k to avoid 5500 filing
2011 – plan to roll over entire deductible IRA into Solo 401k as permitted by the plan — 5500 filing required due to balance >250k
2012 – last year fo work. Final Solo K contribution. Final non-deductible IRA contribution. Convert non-deductible IRA to Roth. 5500 filing required due to balance.
2013 – roll entire Solo 401K to IRA. 5500 filing required due to termination of plan.
Will this work? is it ok to leave the Solo 401K open until the year following the last contribution year?
Permalink Submitted by mk foss on Mon, 2011-08-15 22:15
This should work. The only other consideration is rolling the nondeductible IRA growth into the 401k to make the Roth conversion totally nontaxablle.
The 401k plans never seem to close when you expect them to. Often I see that the 401k is rolled over to the participant’s IRA – you think it’s closed and then you get a year-end statement showing a small dividend paid after the rollover leaving a 12/31 balance.Keeping the plan open an extra year may solve this problem if the only thing in the plan is a wayward dividend of $30-$100.
Permalink Submitted by Joy Dorman on Mon, 2011-08-15 22:39
Thanks. I decided to convert the non-deductible growth at the same time just to simplify — it’s in a diferent place than the solo and deductible IRA.