Currently owns a Solo401K (with checkbook control) and would like to transfer 50% of assets to a rollover IRA account in another brokerage firm. Is this allowable by law? If so, what are the things to avoid to ensure no mistakes in the process? Thank you.
Chapter 7 Bankruptcy Attorney
Publication 575 indicates the following:
Direct rollover option. You can choose to have any part or all of an eligible rollover distribution paid directly to another qualified retirement plan that accepts rollover distributions or to a traditional or Roth IRA.
There is an automatic rollover requirement for mandatory distributions. A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. If you do not make this choice, the plan administrator will automatically roll over the distribution into an IRA of a designated trustee or issuer.
Based upon a review of the material in Publ. 575 it is not clear to me whether or not you can rollover only part of the 401k plan.
I recommend you contact the IRS directly on the issue and ask for help from their tax law advisory section.
1 found this helpful
Contracts / Agreements Lawyer
As a general rule, you can rollover to an IRA - check out the IRS site for the rules. http://www.irs.gov/taxtopics/tc413.html
There are, of course, exceptions and the facts matter so it is not possible to state here with absolute certainty whether you - yourself can do this.
The basics are to make sure it is all done within the proper time frame (60 days) and reported on your tax returns.
Most brokerage houses should be able to direct you through the process.