Open a self-employed 401(k) to rollover an IRA to an employer 401(k)

[Paul der Krake]

I have this job that for some reason doesn't let me rollover a contributory traditional IRA into the company's 401(k). No idea why, it seems like plans would want more assets, not less.

But they'll let me rollover money from employer 401(k).

1) Open a self-employed 401(k) for my new side hustle of mowing lawns
2) Rollover money from the IRA to my new self-employed 401(k)
3) Realize that mowing lawn is hard, never actually start mowing
4) Rollover self-employed 401(k) money into the employer 401(k)

Aside from generating needless paperwork for a plan I don't intend on using, what's wrong with this approach?

[seattlecyclone]

There's probably a chance that the IRS would raise questions about a 401(k) associated with a "business" that never earned any income and that closed up shop right after accepting an IRA rollover into the 401(k) plan. I don't know what chance there would be, or what the penalty for having the whole thing declared a sham would be, but it just doesn't seem worth the risk. Find some actual side work even if it's only for a little bit of money and the whole thing smells a lot better.

[Paul der Krake]

Okay, that's more or less what I figured. Another wrinkle is that the City of Seattle charges $110 PER YEAR for conducting a business, even if I never leave my apartment and talk only to customers somewhere else.

So it'd be an expensive proposition even if my business does nothing. Guess I better find a real side hustle then. I was thinking of driving for Uber/Lyft for shits and giggles, that should pass the smell test.

[seattlecyclone]

Okay, that's more or less what I figured. Another wrinkle is that the City of Seattle charges $110 PER YEAR for conducting a business, even if I never leave my apartment and talk only to customers somewhere else.

So it'd be an expensive proposition even if my business does nothing. Guess I better find a real side hustle then. I was thinking of driving for Uber/Lyft for shits and giggles, that should pass the smell test.

You could just not tell the city about it. They have no way of knowing whether you filed a Schedule C or not.