Can I Roll an IRA Into a Solo 401(k)?

It's not surprising that a lot of people ask us, "Can I roll an IRA into a Self-Directed 401(k)?" given that investing with one of our self-directed accounts can give you more investment options and help lower any fees associated with your account. But for some reason, this is one of those questions that has people confused even though the answer is fairly simple. If you want to roll over an IRA into a Self-Directed 401(k), you need not worry: You can usually roll over an IRA into a Self-Directed Solo 401(k). This includes rollovers of a SIMPLE IRA into a Solo 401(k). The reason for this is that the Solo 401(k) is an IRS-approved qualified retirement plan. The IRS states this clearly in its regulations:

"You may be able to roll over, tax-free, a distribution from your Traditional IRA into a qualified plan. These plans include the Federal Thrift Savings Plan (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans)."

Although you can move or roll an IRA into a Self-Directed 401(k) in most situations, there is one exception to the rule. The IRS regulations state that you cannot roll over a Roth IRA to a 401(k). Thus, if you have a Roth IRA, you are fairly limited as to your rollover options. The Roth IRA obviously doesn't prevent you from opening another account, but the specific funds themselves are somewhat inaccessible.

However, while you can't roll over a Roth IRA into a Self-Directed 401(k), you can roll over a Roth 401(k). A Roth 401(k) may be rolled over into a Self-Directed Roth Solo 401(k) without any problems.

So, can you roll an IRA into a Self-Directed 401(k)? Yes, in most situations. But can you roll a Roth IRA into a Self-Directed 401(k)? No, though you can roll a Roth 401(k) into a Self-Directed Roth 401(k).

Interested in Learning More?

Schedule a call with one of our Self-Directed Specialists today to get answers to your questions and find the investment vehicle that's right for you.