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

If you’re a small business owner, solopreneur, looking to maximize retirement savings, a Solo 401(k) can be one of the most powerful tools in your financial arsenal. But what if you already have money sitting in an IRA? Can you roll it into a Solo 401(k)? Understanding which accounts qualify for a rollover  is crucial for tax planning, investment flexibility, and growing your retirement nest egg.

What Is a Solo 401(k)?

A Solo 401(k), also called an individual 401(k), is designed specifically for self-employed individuals and small business owners with employees other than a spouse. This employer plan allows higher contribution limits than IRAs because you contribute both as an employee and an employer. For 2025, contribution limits can reach up to $70,000 if you’re under 50, and $77,500 if you’re 50 or older, thanks to catch-up contributions. There is also a special catch-up contribution for individuals who are specifically age 60-63, and that amount is $11,250 in lieu of the normal catch-up of $7,500. One major benefit of a Solo 401(k) is the ability to consolidate retirement funds from other accounts, including certain types of IRAs, into one plan — simplifying management and potentially giving you better investment options and lower fees.

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

1. Traditional IRA
   Traditional IRAs with pre-tax contributions are eligible for a rollover. Roth or after-tax funds from a traditional IRA cannot be rolled into a standard Solo 401(k).

2. SEP IRA
   Funds from a SEP IRA are generally pre-tax and can be rolled over into a Solo 401(k). This is ideal for small business owners who previously contributed to a SEP IRA and want to consolidate their accounts.

3. SIMPLE IRA
   A SIMPLE IRA can be rolled over, but only after two years from the date you first contributed  in the plan. 

4. 401(k) from Previous Employers
   If you have a 401(k) from a previous employer (including traditional 401(k)s, profit-sharing plans, or money purchase plans), you can roll these funds into your Solo 401(k).  Since its an employer plan, if you ‘ve made Roth contributions to the plan you can also those funds over.

5. 403(b) and 457(b) Plans
   Government or nonprofit retirement plans like 403(b) and eligible 457(b) plans can also be rolled over into a Solo 401(k). And just like the 401(k) plan, Roth contributions may also be rolled over to the Solo 401(k) plan.
   
   

Remember that in order to move the funds to a Solo 401(k) you must be self-employed (e.g., sole proprietor, partnership or corporation)  and have no employees. 

Accounts You Cannot Roll into a Solo 401(k)

Not all retirement accounts are eligible:

• Roth IRA: Cannot be rolled into a traditional Solo 401(k) because of tax differences. However, if your Solo 401(k) plan offers a Roth 401(k) component, you may roll Roth funds into that portion.
• Inherited IRA (Beneficiary IRA): Cannot be rolled over unless inherited from a spouse.
• Active Employer Plans (sometimes): If you’re still employed elsewhere, your current employer may restrict in-service rollovers. Always check with the plan administrator.
  
  

How to Rollover Funds into a Solo 401(k)

To ensure a smooth, tax-free transfer, always complete a direct rollover from your previous employer once you’re eligible to take a distribution. This ensures the funds never pass through your hands, avoiding potential taxes or penalties.

Step-by-Step Rollover Guide:

1. Open a Solo 401(k) Plan 
   Work with a provider like IRAR that offers a Self-Directed Solo 401(k), ideally with a recordkeeping platform.
2. Confirm Eligibility
   Verify that your current retirement account allows rollovers.
3. Request a Direct Rollover
   Contact your current custodian and provide your Solo 401(k) plan’s details (plan name, EIN, and checking account info).
4. Deposit the Funds Properly
   Ensure the check or wire is made payable to the Solo 401(k) plan, not to you personally, and deposit directly into the plan’s account.
5. Document and Report
   Keep records for IRS Form 1099-R (from the old custodian).
   
   

Why Roll Your IRA into a Solo 401(k) at IRAR?

• Higher Contribution Limits: Solo 401(k)s allow you to contribute more than IRAs.
• Loan Options: Some plans allow you to borrow from your Solo 401(k).
• Invest in Real Estate and Alternatives: With IRAR’s Self-Directed Solo 401(k), you can invest in real estate and other alternative assets for greater portfolio diversification.
• Recordkeeping Made Easy: IRAR’s platform provides tools to help track contribution sources and  investments to maintain compliance with IRS rules.
• Simplified Account Management: Consolidate multiple accounts to reduce paperwork and streamline retirement planning.
  
  

Final Thoughts

Rolling over your retirement accounts into a Solo 401(k) is an excellent strategy for small business owners seeking control, higher contribution limits, and investment flexibility. Traditional IRAs, SEP IRAs, SIMPLE IRAs (after two years), and former employer plans are typically eligible for rollover into your Solo 401(k).. Using a Self-Directed Solo 401(k) with IRAR allows you to invest in real estate and maintain proper recordkeeping, giving you even more power and flexibility over your retirement strategy. Since you are the trustee of the plan you are in control of your plan and do not have to call a Custodian to conduct transactions.  Always use a direct rollover and consult your plan provider or financial advisor to ensure compliance with IRS rules. 

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