Thanks - I read the blog. Very helpful. Just to confirm - here is my specific situation and the steps I'd like to take.
Current Status
- Existing SEP-IRA from when I was single with app 50K.
- Married filing jointly. On 2012 return, Schedule
C shows about 16.3K on line 31 (not rental income, mostly commissions from
my wife's work as independent real estate agent)
- 2013 return should show at least the same amount on Schedule C. Possibly more if we can move the rental income.
Goals
- Establish Solo401
- Transfer 50K of SEP into Solo401k
- Take advantage of 60 day window for SEP rollover as
short term loan to me
Steps:
1.
Set up a Solo 401k (one account each
for my wife and me under the same plan)
2.
Deposit initial funding based on
expected minimum of 16K self-employment income in 2013.
3.
Withdraw SEP IRA income and close
existing account.
4.
Deposit SEP total into new Solo401k
account after 45-55 days
Does
this sound like it would work?
ANSWER: Based on the above information,
you and your spouse are both self-employed (at least on a part-time basis) and
don’t own any other businesses that have any full-time employees; as such, you
appear to qualify for a solo 401k. You can read IRS publication 560 to further help you confirm that you are
self-employed.
With respect to your SEP IRA, yes it
may be deposited to the solo 401k plan prior to the 60 day rollover expiration
window since the IRS retirement account rules permit for the transfer of SEP
IRA funds to a solo 401k. However, make sure that you haven’t already processed
a 60 day rollover in the 12 months from the SEP IRA as only one rollover may be
performed per 12 month period.
Lastly, yes only one solo 401k plan
would be adopted, but two individual holding accounts opened to hold each solo
401k participants’ retirement funds.
Thanks,
Jack in Houston, TX
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