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Updated almost 5 years ago,
Converting Roth Solo 401k to Self-Directed Roth Solo 401k?
We will be setting up a Self-directed Solo 401(k), which is similar to but significantly different in subtle ways from a Self-directed IRA, and use it to buy our second investment property. Have you heard of these two kinds of retirement accounts? I kid.
But I do want to focus on the SD Solo 401(k) version of this scheme. We like the idea of the SD S401k because we would not have to set up an LLC, nor would we have to pay a custodian to do the frankly no-brainer work of receiving deposits and cutting checks for a new water heater. Since I am self-employed, the SDS401k is an option available to me, and this allows me to act as my own custodian, so I can write the checks to purchase and manage the day-to-day transactions. (This is where someone would chime in if I have this wrong.)
My question is: Can I roll over my existing Roth Solo 401k into a Self-directed Roth Solo 401k? I have a Roth Solo 401k, and so far it seems this is the best choice for me to fund the account. I have read in a couple articles and threads that a SD S401k can be a Roth, but I read in one write up that Roth funds cannot be rolled over into such an account. But it was unclear if this only referred to converting a Roth IRA.
I will be contacting potential account professionals this week, but finding out more about this issue would be helpful. Thanks for any comments or experience you may have.