If I rollover a Traditional IRA into a solo 401k and later reverse it (say there was a problem with how the solo 401k was initially set up; the solo 401k plan was set up correctly, but I opened the wrong type of trust account as the vehicle for the solo 401k), would a 1099-R be generated on the initial rollover? Is there a time limit for me to reverse the initial rollover?
The plan administrator set up the solo 401k correctly. I have an EIN and everything. I opened a trust account at Interactive Brokers to hold the assets of the solo 401k, but in the process of setting up the trust account, I opened a “regular” trust account instead of a “regulated pension trust” account. I think once the IRS sees the details the EIN, it should be okay. I just don’t like the fact that for the 1099-R that’ll be generated, Interactive Brokers will probably use the wrong code (code 1 instead of code G), and I’ll have to communicate with IRS and explain the whole situation. So, it sounds like even if I reverse the transfer (move the exact assets back), a 1099-R will be generated?
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-24 16:07
You mean you selected the wrong provider or plan administrator for the solo K? Please clarify the error. In any event, the IRA to solo K direct rollover or the distribution from the IRA to you will both generate a 1099R form. Depending on the details, you may have to do another direct rollover to the desired provider.