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Updated almost 4 years ago on . Most recent reply
self-directed solo roth conversion
I have a self-directed solo 401k and want to convert some portion to Roth. Does the pro-rata rule apply to solo 401k?
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- CPA delivering RE Tax Tools: 1031 Exchange, SDIRA, 401(k), Cost Seg
- New York City, NY
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@Taylor L. Way overdue, but I make an effort to honor every tag - which I'm honored to receive - with a response... even if takes some time to get to it. :)
The pro rata rule does apply to 401k plan Roth conversions. BUT, (1) after-tax contributions and associated earnings can (theoretically) be isolated from (2) pre-tax contributions and associated earnings, thereby presenting opportunity to be more surgical & strategic with 401k & "QRP" conversions.
Caveat: This is still a way oversimplified response to a question that can have incredible nuance to it.