Unwiding Roth Solo 401k Conversion

 QUESTON: I recently read an article in the Wall Street Journal on the new in-plan 401k conversion rules for 2013. I’m thinking of converting my solo 401k to a Roth Solo 401k, but I’m not sure if I can later change my mind after the conversion is made like I can with a Roth IRA conversion, which I processed back in 2008 and later reprocessed back to a traditional IRA in 2009 as a result of the market crash.  Can you please tell me if I can convert back to a pre-tax solo 401k after I convert to a Solo 401k Roth?

ANSWER:  While the American Taxpayer Relief Act of 2012 (ATRA) modified the Roth in-plan solo 401k rules initially released under SBJA (Small Business Jobs Act) by now allowing Solo 401k participants to make in-plan conversions even if they are not eligible to take a distribution from the solo 401k plan, the  new rules did not change the non-recharacterization rules. Therefore, once an in-plan solo 401k conversion is processed, it may not be unwound or recharactherized. As such, make sure you truly want to convert your Solo 401k to a Roth Solo 401k because the amount converted will increase your taxable income for the year.