401kSelfStarter.comEducational Blog By Harvard Law Attorney
Max Out IRA Contribution & Then Transfer it to a Self-Directed Solo 401k
Good morning. Quick question. Can I make my max contribution ($7000 – I am 55) to my existing IRA, then transfer the new balance to the solo 401k, and then still do my max voluntary contribution for 2020?
While Traditional IRA contributions don't affect the participant's ability to make solo 401k contributions, contributing to a solo 401k plan does affect the ability to make Traditional IRA contributions on a pretax basis (tax deductible).
You can view the IRA contribution limits HERE to determine if the IRA contribution is tax deductible. If it is not tax deductible, and while you can then make it on a non-deductible basis, you won't be able to transfer the non-deductible IRA basis to the solo 401k plan because the IRA rules do not allow for the transfer of non-deductible (after-tax) IRAs to a solo 401k plan.
George Blower is a principal of My Solo 401k Financial LLC and also serves as the General Counsel with responsibility for providing all legal services to the organization.
Prior to joining My Solo 401k Financial, he served as general counsel for a subsidiary of a Fortune 500 financial services company.
He received his bachelor's degree in economics at the University of Michigan in 1998 with honors. He received his juris doctorate from Harvard Law School in 2001. He is a member of the Michigan and Ohio bar associations.
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