Solo 401k. Conversion from regular 401k account to Roth 401k account

Submitted by Ryan Smith on Sun, 2020-03-29 13:13

My self employed client has a solo 401k where most of the “regular” 401k money was transferred in from a SEP IRA. He has since accumulated contributions in his Roth 401k portion of which the plan obviously allows. I have been told that it’s up the the TPA and plan document if a conversion from the regular portion of the 401k to the Roth 401k is allowed. Anyone have any experience with this? I can’t find anything in the plan document that verifies either way.



Submitted by Alan - IRA critic on Sun, 2020-03-29 14:22

Since doing IRRs (In Plan Roth Rollovers) requires a much increased level of plan accounting, quite a few plans with Roth accounts (including the massive TSP) do not allow IRRs. If the plan provisions are silent, it probably means that IRRs are not allowed. Check with the TPA.

Submitted by William Tuttle on Sun, 2020-03-29 20:04

  • If this is a mainstream plan, the only one-participant 401k plan provider I am aware of that supports IRRs is E-Trade. If the plan is at another provider, your client could amend their plan to E-Trade and do a trustee -> trustee transfer to E-Trade.
  • If this is a TPA based plan. Contact your TPA. It may or may not be supported under the adoption agreement and/or plan document. It could be as simple as an election and/or amended adoption agreement. There may be other options the TPA can offer. Here again, if necessary you could amend the plan to E-Trade or through another TPA.

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