How Solo 401k Rollovers Work

Looking to open a Solo 401k plan? Get started today – The Carry Solo 401k Plan is a featured-packed self-directed account that lets you invest in both Traditional and alternative assets, take out a loan, perform rollovers, or do a Mega Backdoor Roth conversion.

Rolling over assets into your Solo 401k is one way to consolidate your retirement funds and potentially simplify account management. 

Let’s walk through how rollovers work, what types of accounts are eligible, and how to decide if this move is right for you.

What Is a Rollover and How Does It Work?

A rollover is when you move funds from one retirement account to another, typically done to maintain tax-deferred status. In this case, the new account would be a Solo 401k.

Many people choose a Solo 401k rollover to take advantage of tax-deferred growth or broader investment options that may better align with their financial goals. A Solo 401k generally allows for the highest contribution limits among retirement plans, includes optional Roth contributions, and offers catch-up contributions for those age 50 or older. Depending on the plan provider, you may also be able to take a loan or invest in almost any asset type, subject to IRS rules. Solo 401ks typically offer flexible investment choices—including real estate and private equity (if your plan permits).

Solo 401ks are designed for self-employed individuals or small business owners with no full-time employees other than a spouse. If you’re eligible, it may be worth comparing the contribution potential and features of a Solo 401k with those of other retirement plans.

Direct vs Indirect Rollovers

There are two ways to complete a Solo 401k rollover: direct and indirect.

Direct Rollovers

A direct rollover is the most common method for moving funds into a Solo 401k. The funds are transferred directly from your old account custodian to the new Solo 401k plan custodian. The check is made payable to the plan — not to you as the participant — which helps preserve the tax-deferred status.

Indirect Rollovers

With an indirect rollover, the funds are sent to you first rather than directly to the Solo 401k. You must then deposit the entire amount into your Solo 401k within 60 days. If you miss the deadline, the rollover may be treated as a taxable distribution — and if you’re under age 59½, a 10 percent early withdrawal penalty could also apply.

In addition, indirect rollovers are subject to mandatory 20 percent tax withholding by the sending plan. You are still required to deposit the full amount, not just the 80 percent you receive, into your Solo 401k within 60 days. This means you must cover the withheld portion out of pocket. If completed correctly, the withheld amount may be refunded to you when you file your taxes as a credit.

✏️ Hypothetical Example: 

Let’s say you want to do an indirect rollover of $50,000 from your former employer’s 401k into your Solo 401k. The plan administrator is required to withhold 20 percent—so you would receive a check for $40,000, not the full amount. You’d then have 60 days to come up with the remaining $10,000 and deposit the full $50,000 into your Solo 401k to maintain tax-deferred status.

If the full amount is deposited within the 60-day window, the IRS will treat the rollover as complete, and the withheld $10,000 would typically be refunded to you as a tax credit when you file your return.

For many people, a direct rollover is often simpler and can help avoid taxes or penalties from missed deadlines or cash flow issues. If you don’t need immediate access to your retirement funds, it’s typically the safer option over an indirect rollover.

What Are the Benefits of Rolling Over Funds to a Solo 401k?

Rolling over funds into a Solo 401k can offer several advantages:

✅ Flexible Investment Options

Depending on your Solo 401k provider, you may have access to a broader range of investment options—including mutual funds, individual stocks, real estate, and private equity—compared to a traditional workplace 401k. However, all investments must comply with IRS rules on prohibited transactions.

✅ High Contribution Limits

A Solo 401k may allow you to contribute as both the employee and employer. For 2025, the total contribution limit is $70,000. This includes up to $23,500 in employee deferrals and up to 25% of compensation if you’re incorporated, or approximately 20% of net earnings if you’re self-employed. Contribution calculations vary depending on your business structure.

✅ Catch-Up Contributions for Age 50+

If you’re age 50 or older, you can make an additional catch-up contribution of $7,500 in 2025, bringing your total potential contribution to $77,500.

✅ Roth Contribution Option

If your Solo 401k plan includes a Roth feature, you may designate some or all of your employee contributions as Roth contributions. Employer contributions, however, must be made on a pre-tax basis.

✅ Loan Access (If Plan Permits)

If your Solo 401k plan allows it, you may be able to take a loan of up to 50 percent of your account balance, with a maximum loan amount of $50,000. While the interest is paid back into your own account, a loan reduces your invested balance and may limit potential growth. 

Solo 401k loans are typically considered a last resort, as they carry trade-offs — including interest costs (usually Prime Rate plus one or two percent) and the opportunity cost of pulling funds from your investments.

What Accounts Can I Roll Over Into a Solo 401k?

You can roll over many types of retirement accounts into a Solo 401k, depending on IRS rollover rules and the type of account you’re transferring from.

Here are the most common account types that can be rolled over into a Solo 401k:

✅ Former employer 401k Plan 

✅ 403b – for public education and nonprofit employees

✅ TSP (Thrift Savings Plan) – after leaving federal service

✅ Pension Plan – depending on plan rules and IRS eligibility

✅ Traditional IRA‍

✅ SEP IRA

✅ SIMPLE IRA – only after the account has been open for at least two years

❌ Not allowed: The IRS does not allow funds from a Roth IRA to be rolled over into a Solo 401k under any circumstances.

Some employer 401k plans may restrict rollovers if you’re still employed, so check with your plan administrator regarding in-service rollover rules.

Can I Have Both a Company 401k and a Solo 401k?

Yes. You can open a Solo 401k for your self-employment income—even if you also contribute to a company 401k.Just remember:

How Much Can I Roll Over Into a Solo 401k?

There are generally no IRS limits on how much you can roll over into a Solo 401k. Whether you have $5,000 or $500,000, you may be able to move all, part, or none of those funds—depending on your financial goals and your plan provider’s rules.

Unlike contributions, which are subject to annual IRS limits, rollovers are not capped. This means they can be a practical way to transfer a significant amount into your Solo 401k—especially if you’re consolidating accounts or looking to take advantage of broader investment options within your plan.

Do Rollovers Affect My Contribution Limit?

No. Rollovers and contributions are treated separately. A rollover does not impact your annual contribution limit—you can still contribute up to the IRS maximum for the year, based on your income and plan eligibility.

Can I Roll Over Assets, or Do I Need to Convert Them to Cash First?

Some Solo 401k plans may allow you to roll over certain assets in-kind—meaning without liquidating them first. This depends on the asset type and your plan provider’s rules.

Wrapping Up

Rolling over funds from another retirement account can be one of the most efficient ways to fund your Solo 401k. Rollovers are not counted toward your annual contribution limit, and there are generally no limits on how much you can transfer.

A Solo 401k may be one of the most flexible tax-advantaged retirement plans for self-employed individuals and business owners with no full-time employees. It typically offers higher contribution limits, optional Roth contributions, the potential  to invest in any asset type (subject to IRS rules), and — if the plan permits — the ability to take out a loan. 

While a Solo 401k offers many potential benefits, whether it’s the right choice depends on your individual financial situation, goals, and the structure of your business. It may be worth comparing it with other retirement plans or speaking with a professional before deciding how to allocate your funds.

Looking to open a Solo 401k plan? Get started today – The Carry Solo 401k Plan is a featured-packed self-directed account that lets you invest in both Traditional and alternative assets, take out a loan, or do a Mega Backdoor Roth conversion.

📌 Curious about rolling over your IRA into a Carry Solo 401k? Click here to learn how it works.

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