Rolling over from an IRA LLC to the Solo 401k is a fairly straightforward process, but you'll  want to work with your current IRA custodian to ensure the process goes smoothly.

The process involves undoing the IRA LLC in sequential steps, namely:

  1. Re-assign ownership of hard assets from the IRA LLC to the Solo 401k

  2. Report LLC fair-market valuation to your IRA custodian

  3. Dissolve the LLC

  4. Rollover remaining funds/assets from the IRA to the Solo 401k

Your IRA custodian has to report the movement of assets via form 1099-R. When you report the final fair market value of your LLC, they'll have the correct dollar amount to put on the 1099-R of what is rolling from the IRA into the Solo 401k.

Your IRA custodian will prepare form 1099-R for you when they complete the rollover and if all goes as it should, it'll be a direct rollover with no taxable consequences.

Remember, the IRA custodian gave you permission to initially invest IRA funds into the LLC you manage. As such, everything needs to be unwound with assets ending back in the IRA to complete the direct rollover.

Let's take a look at how the process works if you currently have real estate or other tangible assets in your IRA LLC and you want to move those assets into your new Solo 401k.

Rolling over assets (such as real estate):

  1. Create a grant deed which will re-assign ownership of the asset from the IRA LLC to the Solo 401k trust. It's advised you work with your legal counsel on this. Please see more notes on grant deeds below.

  2. Report the final fair market valuation of the LLC to your IRA custodian so they can correctly complete form 1099-R to document the rollover

  3. Dissolve the LLC by completing and filing articles of dissolution with the Secretary of State where you formed the LLC

  4. Send a copy of the LLC dissolution to your IRA custodian for their records

  5. Complete a direct rollover from the IRA to the Solo 401k. This is sometimes called a transfer as it's going from an IRA to a 401k. Your IRA custodian may even call it a distribution. The important thing to note is that it's a direct rollover/transfer from the IRA into a qualified plan and there shouldn't be any taxes owed on the rollover.  The IRA custodian should list the fair market value of the LLC as the amount to transfer (plus any liquid funds you're rolling in as well). 

Notes: You'll want to specify for your IRA custodian that you're not transferring the LLC into the Solo 401k, but rather transferring the assets held inside the LLC.

Grant deeds are instruments used to document the transfer of ownership from one party to another. There are generally two parties in a grant deed: the grantor (who's transferring the property), and the grantee (who's receiving the property). This document will typically need to be notarized. 

In the case of transferring assets from the IRA LLC to the Solo 401k, the LLC would be the grantor, and the Solo 401k trust would be the grantee.  The properties should be re-titled and re-registered in the name of the Solo 401k trust to complete the re-assignment of ownership. After the grant deeds are prepared, proceed with the steps above.

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