Author Topic: IRA to 401(k) conversion. Need to be self-employed to have a solo 401(k)?  (Read 999 times)

Mola

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I am looking into the backdoor Roth. Problem is I have been rolling past 401(k)s into traditional IRAs and in order to do the backdoor Roth I need to get my money out of the traditional IRAs and into a 401(k). My current company has a 401(k) but it has really crappy options so I don't want to roll into that. So I was thinking about an individual/solo 401(k). These are designed for self-employed people but do I really have to be self-employed? I could easily register a DBA if I had to and create a sole proprietorship that does nothing and earns nothing. Or I could actually earn $50/year doing some tiny side thing.

Or any other ideas how to move from a traditional IRA to a non-company sponsored 401(k) or some other option to get rid of my traditional IRAs?

Freedom2016

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You have to be a sole proprietor or owner of an S Corporation, C Corporation or partnership to have a solo 401k.

seanmerron

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Do you have to get it into a 401K because of tax implications of already having other IRAs when doing a backdoor Roth?

I wonder if there is different treatment on Rollover IRAs vs. Traditional IRAs for the backdoor Roth...

Mola

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You have to be a sole proprietor or owner of an S Corporation, C Corporation or partnership to have a solo 401k.

Sole Proprietorship is easy. Do I need to have Self-Employment income and therefore tax? I ask because I currently have rentals and do my own property management under a sole proprietorship. However rental income is not self-employment income. So in that sense I am not "self-employed" according to the IRS.

Do you have to get it into a 401K because of tax implications of already having other IRAs when doing a backdoor Roth?

I wonder if there is different treatment on Rollover IRAs vs. Traditional IRAs for the backdoor Roth...

Good question. However, according to what I read on Google it is "any kind of non-roth IRA." So rollovers would have the same problems as traditional.
« Last Edit: March 06, 2017, 09:15:51 AM by Mola »