RECORD A ROTH 401(k) CONVERSION

This form can be used to record a conversion of tax-deferred funds in the Solo 401(k), to the plan’s Roth 401(k) sub-account.  This form is kept by the Trustee/Administrator and is not required to be filed with or sent to anyone.

Download In-Plan Roth Rollover Form

Things to consider:

Technically this is called an In-Plan Roth Rollover, because you’re rolling funds from one side of the plan (the before-tax or tax-deferred side), to the other side of the plan (the after-tax or Roth side).

Remember:

  • An in-plan Roth rollover or conversion will create a taxable event. You will declare as ordinary income on your 1040, the dollar amount converted to the Roth 401(k).
  • A 1099-R must be filed by February 28th, to report the conversion.
  • No withholdings are required for a conversion.
  • Cash may be converted, as may assets. If an asset or assets are being converted, it is advisable to get a third-party valuation of the asset(s) to set the conversion amount in dollars.
  • Roth 401(k) funds must be separated from normal or tax-deferred 401(k) funds. In plain English, this means you must open a separate bank account to hold Roth 401(k) funds.
  • A Roth 401(k) conversion is IRREVOCABLE, so once you convert, it can’t be undone.

ALWAYS consult your CPA or other tax professional when converting to a Roth 401(k).  Taxes will be incurred, and the conversion must be reported.