Two Cases When a Roth IRA Conversion Makes Sense

Two Cases When a Roth IRA Conversion Makes Sense

Don't rule out a Roth IRA conversion without weighing all the factors says financial adviser Dana Anspach.

Ask Bob: Can I Roll My Business Retirement Plans into Other Plans?

A business owner asks about rolling over retirement plans to other plans or into his solo 401(k).
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Question

I have a rollover IRA and a SEP IRA. Can I roll the rollover into the SEP or the SEP into the rollover? If not, can I open a solo 401(k) and roll either one or both of those accounts into the solo 401(k)?

Answer

Yes, you can rollover your Rollover IRA to your SEP-IRA and vice versa, says Kaleb Paddock, CFP, founder of Ten Talents Financial Planning. “However, your SEP-IRA is tied to your business, or a former business, and for clean bookkeeping purposes for your business, there can be administrative value in keeping the accounts separate,” he notes.

Your question about opening a solo 401(k) and rolling over either your IRA or SEP-IRA will be answered by your 401(k) Plan Document. “Yes, it’s allowable to rollover an IRA or SEP-IRA to a 401(k) account,” Paddock says. “However, the 401(k) Plan Document MUST have specific language allowing this transfer. Some Plan Documents include the language, others do not.” He explains that this is an example of a “discretionary” Plan feature and if you open a solo 401(k) Plan, you need to carefully select your Plan features to make sure your 401(k) Plan will operate as you intend.

Ultimately, says Paddock, you will need to ask yourself, “What am I trying to accomplish with these transfers?” Your answer to this question will help guide your administrative next steps for any rollovers.

Got questions? Get answers!

Email Robert.Powell@maven.io.


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Question

I have a rollover IRA and a SEP IRA. Can I roll the rollover into the SEP or the SEP into the rollover? If not, can I open a solo 401(k) and roll either one or both of those accounts into the solo 401(k)?

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