Stopping and restarting solo 401k

Submitted by Ross Bonifield on Wed, 2022-06-29 17:40

I have a client with TD Ameritrade that has both traditional and Roth deposits in solo 401k plan
Schwab will not allow Roth money in solo Ks after Aug 1st of this year
Client makes contributions to account once or twice/year
Can client fully fund and terminate account this year prior to Aug 1st, then roll assets to IRAs
Then establish new plan in 2023 with Schwab for traditional only deposits without any IRS problems?
I believe if terminated client would have to wait entire year to open new solo 401k – still would have plenty of time to fund for 2023 I would think
What potential problems would client possibly run into by stopping and restarting?



Submitted by William Tuttle on Wed, 2022-06-29 19:06

  • It is most likely unnecessary to terminate the TD Ameritrade individual 401k plan. Schwab will almost certainly have TD Ameritrade individual 401k plan sponsors amend/restate the plan to Schwab.
  • A significant percentage of Roth accounts exist. Schwab will almost certainly provide a way to solely rollover the orphaned designated Roth accounts to a Roth IRA.
  • Schwab months ago issued an extensive document outlining the transition. You/your client should read that document and contact Schwab for guidance. There should be no need to reinvent the wheel.


Add new comment

Log in or register to post comments