52626 Posted May 13 Share Posted May 13 Does the 12 month rule ( terminating 401(k) and starting a new plan) apply to a Solo 401(k) Plan. In December of 2023 solo 401(k) sponsor terminated his Roth 401(k) and rolled the funds to his Roth IRA. Now he wants to start another Solo 401(k) for 2024. Does the 12 month rule apply in which case he can not defer to the new plan until 2025? Thank You Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted May 13 Share Posted May 13 Did he have a distributable event other than plan term? Bri 1 Link to comment Share on other sites More sharing options...
CuseFan Posted May 13 Share Posted May 13 If those 401(k) successor plan rules did not apply to owner-only plans then they could circumvent the pre-59.5 in-service distribution prohibition rules at will. Unless there was some specific investment he could in IRA rather than 401(k), what was purpose for terminating in the first place? If no other distributable event per RBG, I think he must wait 12 months from the distribution. Luke Bailey , ugueth , Bill Presson and 1 other 4 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
52626 Posted May 13 Author Share Posted May 13 participant was over the age of 59 1/2. so he could have taken a payment. Not really sure why he terminated, but I think he did not think he was going to have any additional income to fund a solo Roth 401(k). Turns out he will have income for the next couple of years and wanted to establish a new solo 401(k). Since he had a distributable event before the termination, the 12 month rule should not be an issue. Do you agree. Thanks Link to comment Share on other sites More sharing options...
CuseFan Posted May 14 Share Posted May 14 Not necessarily. Did plan have provision to allow in-service at 59.5? Even so, the plan still was terminated and that is the event triggering the successor plan rules. Starting a new plan would not be w/o risk, so I would proceed forewarned. Bill Presson and Lou S. 2 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
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