When can I setup my Solo 401k?

QUESTION: Hi, as I am still working with the company I am working for but planning to quit by the end of the month, when can I set up my Solo 401k? And after I quit when can I ask to roll over my actual 401k to my Solo 401k?

Thanks,
Seth A.

ANSWER:  Don’t quit your day job in order to qualify to open a solo 401k. Many who are employed with a full-time employer not only continue to participate in their day employer 401k, but also participate in a solo 401k plan, provided they also have their own self-employed business. It is not uncommon in today’s uncertain economy for individuals to have multiple lines of work.

The Solo 401k Qualifying Rules: In order to open a solo 401k plan, the IRS requires that you are self employed. As such, make sure you are self-employed and have not full-time employees besides yourself, business partner or your spouse before you proceed to open a solo 401k from a solo 401k provider.

Lastly, yes the rules allow for the transfer of a former employer 401k plan to a Solo 401k. Some employers have a waiting period of 30 days after separation from employment before the 401k funds can be transferred out, while others allow for the transfer right away. Ultimately, you will need to check with your former employer.