Solo 401k rollovers to IRA
I have a client that has a solo 401k, self directed. She wants to roll over some 401k assets to an IRA to avoid the $250,000 value that would require filing form 5500. She is 54. Is she allowed to roll assets to an IRA plan? Where can I find the authority for that rule? I have spent hours researching this and cannot find definitive guidance from IRS on this.
Thanks for any information you may have.
Permalink Submitted by Alan - IRA critic on Fri, 2024-09-13 20:31
See Sec 401(k)(2)(B)(III), which indicates that the balance of elective deferrals made to the plan are not eligible for in service distribution prior to age 59.5. There are a few exception such as hardship distributions (not eligible for rollover) domestic abuse, etc.
For the rest of the plan balance, the plan document determines if these portions of the plan (eg matching contribution, investment gains) are distributable and when. This portion may be enough to drop the balance below the 5500 filing requirement.