W2 Server with a 401(k) transitioning...

[Derrick Camber]

Hi Everyone,

I was reading Amanda Han's great tax strategy book and was thinking along the lines of the Solo 401(k) to put my money to get a tax deduction and use to fund deals. I am currently a W2 Wage Earner in So Cal. working as a server 5 nights a week. They offer a 401(k) and I was invested in it. I recently stopped because like most I dislike mutual funds and since I keep my tips nightly, I make so much compared to the minimum wage bi-weekly paychecks, that they had not enough money to withhold my taxes above my 10% contribution. My only reason why I was using the 401k was to get the deduction and to take a loan against my 401k in the near future for a down payment on my first property. So now I have this account sitting there for the past 2 months and need to move it somewhere. I am going to start Uber on the side so I will then also be 1099'd self-employed contracted to work for them. The main focus is I am opening a Property Management Company in my area that I use to have with a partner. I know once I do that I can do open a solo(k), what are my options right now besides the rollover IRA, or ROTH Conversion? Remember, I make $80k a year W2 as a server and have no properties yet! I do not want to invest in stocks and rather pay a penalty to close the 401k and get cash to put in a boring savings to use for my first down payment, rather than invest in stocks and potentially lose my money. I also get no employee match at work! Thanks

[Dmitriy Fomichenko]

Hi @Derrick Camber

Solo 401k is a great options and once you are eligible for it you will find it very useful in many ways. But that's in the future. Now, regarding your current employer 401k, regardless if you contribute to it or not you will not be able to roll those funds over into an IRA while you are currently employed there. After you leave the employer - you will have the freedom to move those funds into an IRA, but not until then.