What IRAs Can You Move to a Solo 401(k) as a Small Business Owner?

If you are self-employed or own a business with no eligible employees other than your spouse, a Solo 401(k) may help you increase your retirement savings. If you already have money in an IRA or another retirement plan, you may be able to roll eligible funds into the Solo 401(k). Eligibility depends on the account type, the tax treatment of the funds, and the terms of the receiving plan.

What Is a Solo 401(k)?

A Solo 401(k), also called an individual 401(k) or one-participant 401(k), is designed for a business owner with no eligible common-law employees other than a spouse. The owner can contribute as both an employee and an employer.

For 2025, total employee and employer contributions can reach $70,000 before catch-up contributions. Participants age 50 or older may contribute an additional $7,500, for a total of $77,500. Participants ages 60 through 63 may qualify for the higher $11,250 catch-up contribution, for a total of $81,250.

For 2026, total employee and employer contributions can reach $72,000 before catch-up contributions. Participants age 50 or older may contribute an additional $8,000, for a total of $80,000. Participants ages 60 through 63 may qualify for the higher $11,250 catch-up contribution, for a total of $83,250.

Your contribution cannot exceed the applicable limits, your eligible compensation, or the amount permitted under the plan. A Solo 401(k) may also accept rollovers from certain retirement accounts when allowed by the plan document.

IRAs and Other Accounts You Can Roll Over to a Solo 401(k)

A Solo 401(k) may accept eligible rollover funds from several types of retirement accounts:

1. Traditional IRA
   Pre-tax funds from a Traditional IRA may generally be rolled into a Solo 401(k). Roth IRA funds and after-tax IRA amounts cannot be rolled into the plan.
2. SEP IRA
   Pre-tax funds from a SEP IRA may generally be rolled into a Solo 401(k) if the receiving plan accepts them.
3. SIMPLE IRA
   Funds from a SIMPLE IRA may be rolled into a Solo 401(k) after the two-year period beginning on the date you first participated in the SIMPLE IRA plan.
4. Former Employer 401(k) Plans
   Eligible funds from a former employer’s 401(k), profit-sharing plan, or money purchase plan may generally be rolled into a Solo 401(k). Designated Roth funds may only be moved to a designated Roth account in the receiving plan.
5. 403(b) and Governmental 457(b) Plans
   Eligible funds from 403(b) and governmental 457(b) plans may also be rolled into a Solo 401(k). Designated Roth funds must be transferred to a designated Roth account in the receiving plan.
   
   

The receiving Solo 401(k) must permit the type of rollover you want to complete. You must also have eligible self-employment income from a business with no eligible common-law employees other than your spouse.

Accounts and Funds You Cannot Roll Over to a Solo 401(k)

Some accounts and distributions are not eligible:

• Roth IRA: A Roth IRA cannot be rolled into a Solo 401(k), including a plan with a designated Roth account.
• After-tax IRA funds: Nondeductible contributions held in a Traditional IRA cannot be rolled into a qualified plan.
• Inherited IRA: A beneficiary IRA generally cannot be rolled into a Solo 401(k). A surviving spouse may have additional options, including treating the IRA as their own when eligible.
• Required minimum distributions: Required minimum distributions are not eligible for rollover.
• Current employer plan: Your current employer’s plan may not permit an in-service distribution. Check with the plan administrator before requesting a rollover.
  
  

How to Roll Over Funds to a Solo 401(k)

A direct rollover from an employer plan or a trustee-to-trustee transfer from an IRA generally allows eligible funds to move without being paid directly to you. This can help avoid withholding and reduce the risk of missing the 60-day rollover deadline.

Solo 401(k) Rollover Steps

1. Open a Solo 401(k)
   Establish the plan before requesting the movement of funds.
2. Confirm eligibility
   Verify that you qualify for a Solo 401(k), that the funds are eligible for rollover, and that the new plan accepts them.
3. Request the transfer
   For an employer plan, request a direct rollover. For an IRA, request a trustee-to-trustee transfer to the Solo 401(k).
4. Follow the receiving instructions
   Make sure the check or wire identifies the Solo 401(k) as the recipient and is not payable to you personally.
5. Keep the rollover records
   Retain the distribution, transfer, deposit, and Form 1099-R records associated with the transaction.

Reasons to Roll Eligible Funds into an IRAR Solo 401(k)

• Higher contribution capacity: A Solo 401(k) may allow larger annual contributions than an IRA, depending on your eligible compensation.
• Plan loan option: The plan may permit participant loans when the applicable requirements are met.
• Alternative investments: A self-directed Solo 401(k) may hold real estate and other alternative assets permitted by the plan.
• Recordkeeping support: IRAR provides tools for tracking contributions, investments, and plan activity.
• Account consolidation: Combining eligible retirement funds may reduce the number of accounts and records you need to manage.
  
  

Before You Roll Over Funds

A Solo 401(k) can consolidate eligible pre-tax IRA funds and assets from former employer plans. Traditional IRAs, SEP IRAs, SIMPLE IRAs after the two-year waiting period, and eligible employer plans may qualify. Designated Roth funds from another employer plan may only be moved into a designated Roth account, while Roth IRA funds cannot be rolled into a Solo 401(k).

With a self-directed Solo 401(k), you serve as trustee and direct plan transactions without requesting approval from an IRA custodian. You are also responsible for following the plan document, maintaining records, and complying with IRS and prohibited transaction rules. Review the transaction with your plan administrator or qualified tax professional before moving the funds.

To learn more, schedule a free consultation with a Self-Directed Solo 401(k) expert.