Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

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Topic Author
illumination
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Joined: Tue Apr 02, 2019 6:13 pm

Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by illumination » Tue Oct 29, 2019 12:28 pm

Doing as much research as I can with some previous questions being answered, I wanted to open a Solo Roth 401(k) at E-Trade because it seems to be one of the few that have this option.

I have trouble understanding how this is processed if I wanted to contribute the maximum amount. With a Traditional 401k, I put in $19k for EmployEE and and $37k for EmployER for a total of $56k. How does this work for the Roth 401k in an E-trade account?

I keep reading where I can put the max EmployEE amount directly into the Roth 401k, but for the EmployER amount, it needs to be a traditional 401k contribution, and then converted? Is this correct?

Is this a step need to proceed similar to something like a backdoor Roth IRA where you first have to put it into a non-deductible, traditional IRA and then convert?

Are the limits calculated any differently? What additional forms do I need to have filled out to document this?

I don't want to screw this up, but it seems I get contradictory info when I look around the web for answers. Even some questions I asked from the specialist at E-Trade contradicts what I'm finding here.



Thanks again for all the help.

lakpr
Posts: 3530
Joined: Fri Mar 18, 2011 9:59 am

Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by lakpr » Tue Oct 29, 2019 1:08 pm

I cannot answer the mechanics of actually getting the employer portion to Roth. BUT,

** employER contribution can NEVER be Roth **.

By law. By IRS rules.

Now, if you are vested with the employer match, may be you can convert it to Roth. In my own MegaCorp regular 401k plan, employer match can never be converted to Roth. Only your own contributions, and your after-tax contributions (this is the MBR).

Hope that clarifies SOMETHING ... and I am sure more knowledgeable people than me can come in and help you out.
Last edited by lakpr on Tue Oct 29, 2019 1:17 pm, edited 1 time in total.

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RickBoglehead
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Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by RickBoglehead » Tue Oct 29, 2019 1:15 pm

When you make the actual contributions, you select whether it is employer (always taxable) or employee (taxable or Roth). Mine's at Vanguard, and it could not be clearer. I log in, say that I want to put in $xx,xxx, and the next page lets me specify employer or employee, and decide on the employee contribution if I'm doing taxable, Roth or both.

As to the employer contribution, since I am immediately vested I could then contact Vanguard and tell them I want to roll over the employer contribution, or a portion of it, to a taxable IRA. I could then convert to a Roth IRA. I guess I might be able to tell them to roll it over and convert it one effort, hadn't tried that.
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Spirit Rider
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Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by Spirit Rider » Tue Oct 29, 2019 4:10 pm

Vesting is not the only requirement for rolling over employer contributions out of the plan. The Ascensus 401k plan document that E-Trade, Schwab, TD Ameritrade and Vanguard uses, restrict such rollovers.

The plan document states that you can not rollover an employer contribution for two years after the contributions, until your length of service is five years. Then you can rollover at will.

The OP is talking about the in-plan Roth rollover (IRR) that E-Trade offers. This allows you to rollover any pre-tax plan assets to the designated Roth account.ehile remaining in the plan.

Topic Author
illumination
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Joined: Tue Apr 02, 2019 6:13 pm

Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by illumination » Tue Oct 29, 2019 8:33 pm

Spirit Rider wrote:
Tue Oct 29, 2019 4:10 pm

The OP is talking about the in-plan Roth rollover (IRR) that E-Trade offers. This allows you to rollover any pre-tax plan assets to the designated Roth account.ehile remaining in the plan.
Yes, thank you, that's what I'm asking about.

So how does that work, is this process outlined for me by E-Trade? Do I put it first put my EmployER contribution into a traditional 401k and then ask them for the rollover?

Is there a form to document this that I need to make sure is filled out?

I really want to move forward with this for 2019, but it seems so few know what to do and I don't want to do have a mess to clean up if I was doing it incorrectly. Sometimes getting help from the brokerage is a real crap shoot. I've already gotten info from them that seems to contradict what I've found here.

Spriritrider, can you walk me this on how to put the maximum 401k contribution possible into the Roth 401k?

Thank you so much :sharebeer

Spirit Rider
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Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by Spirit Rider » Tue Oct 29, 2019 10:58 pm

illumination wrote:
Tue Oct 29, 2019 8:33 pm
Spirit Rider wrote:
Tue Oct 29, 2019 4:10 pm
The OP is talking about the in-plan Roth rollover (IRR) that E-Trade offers. This allows you to rollover any pre-tax plan assets to the designated Roth account.ehile remaining in the plan.
Yes, thank you, that's what I'm asking about.

So how does that work, is this process outlined for me by E-Trade? Do I put it first put my EmployER contribution into a traditional 401k and then ask them for the rollover?
That is the only way it can be done
Is there a form to document this that I need to make sure is filled out?
I'm sure there is, but I have no first hand experience. Maybe, some Boglehead who has done this can respond. I understand your hesitancy to rely on CSRs. They don't have the best track record on one-participant 401k operational considerations.
Spriritrider, can you walk me this on how to put the maximum 401k contribution possible into the Roth 401k.
There really shouldn't be much to it. Make your maximum employee deferral as a designated Roth contribution, make your maximum pre-tax employer contribution and do an IRR of the employer contribution to the designated Roth account.

Topic Author
illumination
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Joined: Tue Apr 02, 2019 6:13 pm

Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by illumination » Wed Oct 30, 2019 12:09 am

Spirit Rider wrote:
Tue Oct 29, 2019 10:58 pm

There really shouldn't be much to it. Make your maximum employee deferral as a designated Roth contribution, make your maximum pre-tax employer contribution and do an IRR of the employer contribution to the designated Roth account.
Thanks again, much appreciated! :sharebeer

BusterMcTaco
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Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by BusterMcTaco » Wed Oct 30, 2019 1:12 am

I went through this last year. Check my post history for details. Sorry, on mobile right now or I would link.

I did an IRR on funds I rolled in to the plan, but what Spirit Rider said above rings true. I think I linked the actual plan document in that post or a previous one.

There was a form. They took awhile to actually do it, then did it between ex-dividend date and deposit date so I ended up with unconverted dividends and had to ask them to do it again.

veezbo
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Re: Solo Roth 401k, having trouble understanding mechanics, in plan Roth Rollover (IRR)

Post by veezbo » Tue Jan 14, 2020 3:51 pm

Buster you're talking about this post right? viewtopic.php?f=2&t=241317&p=4447441#p4447441

Considering signing up for ETrade for their solo 401k specifically because their plan allows for the IRR (provided you fill out the necessary page in the application).

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