Many self-employed individuals and small business owners ask whether they can move their IRA savings into a Solo 401k. It’s a common question for those hoping to bring different retirement accounts under one roof or gain access to plan features that may not exist in an IRA.
Rolling funds between retirement accounts can be a powerful way to manage savings, but it also comes with rules and limitations. Understanding which IRA types may qualify for a rollover, how the process typically works, and what restrictions apply could help you avoid mistakes that lead to taxes or penalties.
Learning these basics up front can make it easier to decide if a rollover into a Solo 401k is a good fit for your situation.
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LEARN MORE*Solo 401(k) eligibility and contribution limits depend on IRS rules. Carry does not provide tax advice, consult a tax advisor. Carry Advisors LLC, an SEC-registered investment adviser, provides investment advisory services for discretionary and non-discretionary accounts (e.g., Solo 401(k), IRA, taxable brokerage accounts). Bank and trust accounts are not advised by Carry Advisors. Brokerage accounts are introduced by Global Carry LLC and carried by DriveWealth LLC, both members FINRA/SIPC. Advisory fees may apply and additional disclosures are described in our Form ADV and CRS.
How an IRA Rollover to a Solo 401k Works
Many self-employed individuals and small business owners look for ways to consolidate their retirement savings. A rollover from an IRA into a Solo 401k can be one option.
However, not every IRA type is treated the same:
- Traditional IRAs, SEP IRAs, and SIMPLE IRAs may be eligible for rollovers into a Solo 401k.
- Roth IRAs generally cannot be rolled into a Solo 401k.
- For SIMPLE IRAs, the account must be open for at least two years before a rollover is allowed.
| IRA Type | Eligible for Rollover to Solo 401k? |
| Traditional IRA | ✅Yes |
| SEP IRA | ✅Yes |
| Roth IRA | ❌No |
| SIMPLE IRA | ✅Yes, after two years |
How Much Does an IRA Rollover Cost?
Rolling over an IRA to a Solo 401k does not trigger an IRS fee or tax when done properly. However, some custodians or plan providers may charge processing or account-related fees. These costs vary by institution and plan, so it’s important to confirm them before starting the rollover.
Do I Have to Pay Taxes for Rolling Over an IRA to a Solo 401k?
A properly executed rollover from an IRA to a Solo 401k is typically not taxable if funds move into a Traditional (pre-tax) Solo 401k. Depositing pre-tax IRA funds into a Roth Solo 401k could create a taxable event, so it’s essential to verify the account type first.
How Much Can I Rollover?
There is no IRS limit on the amount that may be rolled over from an IRA to a Solo 401k. Some people transfer only part of their balance, while others move all their IRA funds.
Can I Rollover Assets and Cash?
Most Solo 401k plans accept rollovers in cash. In-kind transfers of securities are generally not allowed and depend on the plan’s rules. For this reason, IRA investments are usually liquidated to cash before the rollover.
Does an IRA Rollover Count as Contributions?
No. An IRA rollover does not count toward Solo 401k contribution limits. Annual contribution rules apply only to new employee or employer contributions, not to funds moved through a rollover.
📝 Note: Plan providers may have their own rules and processes for handling rollovers. Confirm requirements and fees with your IRA custodian and Solo 401k provider before initiating a transfer.
How to Rollover an IRA to a Solo 401k
Rolling over an IRA to a Solo 401k involves a few clear steps. The key is to handle the transfer in a way that keeps the funds tax-deferred and penalty-free.
Start by contacting your IRA custodian. Inform them that you want to move your account to your Solo 401k. They will provide a distribution or transfer form that must be completed before the rollover can begin.
Direct Rollover (Recommended)
With a direct (trustee-to-trustee) rollover:
- Funds move directly from your IRA custodian to your Solo 401k provider.
- You never receive the money personally.
- No taxes, penalties, or mandatory withholding.
- Typically the simplest and safest option.
Indirect Rollover (Alternative Approach)
With an indirect (60-day) rollover:
- Your IRA custodian sends the funds to you first.
- You must redeposit the full gross amount into your Solo 401k within 60 days.
- Subject to mandatory withholding and strict timing rules.
- Missing the 60-day deadline or redepositing less than the full amount may trigger taxes and a 10% additional penalty if under age 59½.
Timing and Limits
The once-per-year 60-day rollover limit applies only to IRA-to-IRA rollovers. It does not apply when rolling funds from an IRA into an employer plan like a Solo 401k. This can make direct rollovers a more flexible and efficient option for consolidating retirement funds.
📌 Also read: How to Rollover a 401k to a Solo 401k
📝 Note: A direct trustee-to-trustee rollover is generally recommended because it minimizes the risk of taxes or penalties and streamlines the transfer. Always verify the process with both your IRA custodian and Solo 401k provider before starting.
Withholding Rules for Indirect Rollovers
When an IRA distribution is paid directly to you in an indirect rollover, the default federal income-tax withholding is 10%, unless you opt out or select a different rate.
To keep the rollover fully nontaxable, you need to replace the withheld amount and redeposit the full gross distribution into your Solo 401k within 60 days. Failing to do so makes the withheld portion taxable and may also trigger the 10% additional tax if you’re under age 59½.
📝 Note: This rule applies only to indirect rollovers. Direct trustee-to-trustee rollovers avoid withholding entirely.
Transfers vs. Rollovers
Moving funds or assets from an IRA to a Solo 401k must always be done through a rollover. A transfer is only allowed between the same type of account, such as moving funds from a Traditional IRA to another Traditional IRA or from a Traditional IRA to a SEP IRA. Since a Solo 401k is a different type of plan, transfers are not permitted.
Wrapping Up
Rolling over an IRA to a Solo 401k can help consolidate retirement funds into one plan and may offer more flexibility. Traditional, SEP, and SIMPLE IRAs usually qualify (with SIMPLE IRAs requiring at least two years before funds can move), while Roth IRAs cannot roll into a Solo 401k.
Choosing a direct rollover can help avoid taxes or penalties. Before starting, confirm plan rules, custodian requirements, and any associated fees.
When in doubt, consider guidance from a qualified professional to ensure the process fits your long-term goals.
📌 Curious about rolling over your IRA into a Carry Solo 401k? Click here to learn how it works.
Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
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