Hi,
My wife has some after-tax basis in her IRA. She is currently a full time mom and our plan was that eventually she will go back to work, enroll in 401k plan, roll the before-tax portion of her IRA into 401k to isolate that after-tax basis. Then we would have converted the after-tax basis to Roth IRA.

But recently the House passed a bill prohibiting Roth conversions starting in 2022. Sounds like the Senate is going to pass that bill as well, therefore the above plan is not going to work.

But this year we dipped a little bit into cryptocurrency mining. Made only about $500 of total income which went into an account set up in my name. That’s not capital gains, that’s self employment income, which I believe we will have to report on Schedule C.

Therefore I am thinking of opening a Solo 401K, adding my wife to it, because she was the one who did all the research about crypto, so she was very involved. Then we would follow the same plan as above.

My concern though is that we only have a few hundred dollars of self-employment income, even though the IRS does not seem to specify how much income we need to open a Solo 401k plan, just that we need some self employment income. Also after this initial experiment we don’t think we will continue mining crypto in the future, so we do not think we will make any more contributions to the Solo 401k plan.

Any thoughts about this? Are there any pitfalls to this strategy?

Thanks
John