Updated January 2024

As a Solo 401k account holder, there are times when you need to move money out of your Solo 401k. This may be moving money out of the pretax portion into your Roth 401k portion. Perhaps you’re moving Roth 401k funds to a Roth IRA, or even doing a distribution from your Solo 401k funds. Anytime you move money out of your Solo 401k plan, you are required to file IRS form 1099-R.

IRS Form 1099-R is used to document a distribution from your retirement plan. As your own Solo 401k plan administrator, you may use form 1099-R for a few reasons:

Some distributions from a retirement plan may be a taxable event.

Let’s cover best practices for completing IRS form 1099-R for a number of different scenarios.

If you have an active Solo 401k plan, we'll file IRS form 1099-R for you to document a Roth conversion for assets held in your Nabers Group Solo 401k.

If you require a 1099-R to document a Required Minimum Distribution (RMD) or normal distribution from the Solo 401k, your CPA will assist you in filing the form.

You must submit your form by January 25th for the previous year's conversions (if you miss the Jan. 25th deadline, you will need to work with your CPA to complete the filing.

There may be instances when you want to convert pretax 401k funds to Roth. Remember, converting pretax funds to Roth is a taxable event. Use a Roth conversion calculator to determine your potential tax liability. In this instance, you are keeping funds inside your Solo 401k plan, but they are moving from one tax-classification to another.

In the PAYER field, enter your 401k trust name, as shown on your EIN letter. Then, enter your employer identification number (EIN). Do not enter your business information. Do not enter your social security number. The payer in this instance is your Solo 401k since that's where funds are leaving from.

The RECIPIENT on IRS form 1099-R should contain your information as plan participant. That's because the you will owe taxes personally on funds moving from pre-tax to Roth (this is a taxable event).

Both the gross distribution and taxable amount are the same in this scenario.

When you move funds from pretax to Roth, that conversion is taxable. The amount you are converting is added to your income for the year, and taxed at ordinary income tax rates.

You’ll need to enter a Distribution code in Box 7, in accordance with IRS instructions. Enter Distribution code G if you are moving funds from your pretax 401k to your Roth 401k. This is an IRR (In-plan Roth Rollover) which is taxable but is still considered a direct rollover inside your retirement plan.

If you are implementing a backdoor Roth conversion, you might make voluntary after-tax contributions to the Solo 401k plan and then decide to convert those funds in-plan to Roth.

Generally, converting after-tax contributions to a Roth 401k is not a taxable event if your contributions never grew or triggered unrealized or realized gains. After-tax contributions do incur taxes on the growth but not on the contributions themselves. If you are simply converting funds before they have grown, there should not be any taxes due on the conversion.

The gross distribution is the amount you are converting to Roth in-plan. However, because you are converting after-tax contributions to Roth, the taxable amount in box 2a is $0. Per IRS instructions, enter the amount as -0-.

Similar to the after-tax to Roth conversion, the payer will be listed as the 401k trust and the recipient will be you as the plan participant.

Enter the amount of voluntary after-tax conversions in box 5 as the basis for your conversion. We strongly recommend completing the conversion before the after-tax funds have had any growth (this growth is taxable).

For Box 7, enter Distribution code G as this is a direct rollover inside your qualified plan. As long as there is no growth on your after-tax contributions (move contributions only), there should be no taxes owed on the in-plan Roth conversion/direct rollover.

Another strategy of the Mega Backdoor Roth conversion is to backdoor funds into a Roth IRA. Simply put, the Solo 401k account holder can make large voluntary after-tax contributions to the Solo 401k plan. Those contributions are then moved to a Roth IRA via an in-service distribution.

In this instance, the PAYER is the Solo 401k trust. Enter the Solo 401k trust name, Solo 401k trust EIN, and Solo 401k trust address on IRS form 1099-R.

For the RECIPIENT, enter your name, your address, and your social security number. You do not need to enter the Roth IRA custodian information.

Similar to the after-tax to Roth conversion, the taxable amount in box 2a is -0- as you are moving after-tax funds to another after-tax account.

Enter the amount of voluntary after-tax conversions in box 5 as the basis for your conversion. We strongly recommend completing the conversion before the after-tax funds have had any growth (this growth is taxable).

Just like moving funds from an after-tax account to Roth 401k, you'll use the same Distribution Code G in box 7, which is for a Direct rollover of a designated Roth account distribution to a Roth IRA.

Moving Roth 401k funds to a Roth IRA is generally not taxable, but requires a different distribution code in Box 7.

You must use code H, which signifies moving funds from a designated Roth account (like a Roth 401k) to a Roth IRA.

The PAYER is the Solo 401k trust. Enter the Solo 401k trust name, Solo 401k trust EIN, and Solo 401k trust address on IRS form 1099-R.

For the RECIPIENT, enter your name, your address, and your social security number. You do not need to enter the Roth IRA custodian information.

Similar to the after-tax to Roth conversion, the taxable amount in box 2a is -0- as you are moving after-tax funds to another after-tax account.

Once you reach age 59.5, you may begin taking withdrawals/distributions from your Solo 401k plan without penalty. If you are taking a regular distribution from pretax/Traditional 401k funds, you will pay taxes on the withdrawal. If you are taking a regular distribution from your Roth 401k, that withdrawal could be tax-free assuming the distribution is “qualified”. According to Investopedia, “To make a “qualified” withdrawal from a Roth 401(k) account, retirement savers must have been contributing to the account for at least the previous five years and be at least 59½ years old.”

If you plan to distribute funds from your pretax Solo 401k funds, the distribution will be added to your income and taxed at ordinary income tax rates.

Enter the PAYER as the Solo 401k trust, and include the Solo 401k trust EIN and Solo 401k trust mailing address. Because you are distributing funds to yourself personally, the RECIPIENT is you personally.

If you are taking a qualified regular distribution from your Roth 401k (you are both age 59.5 and have held funds in the account for 5+ years), enter the amount you are distributing in box 1 and enter -0- in box 2a. Always work with your accountant to verify your Roth 401k distribution is qualified and not subject to taxation.

If you are distributing funds from the pretax portion of your Solo 401k, enter the amount of the distribution in box 1 and the amount of the distribution in box 2a. That’s because you are taxed on distributions from your retirement plan.

Enter Distribution code 7 in box 7 if you are age 59.5 or older for a normal distribution.

For those under age 59.5, you may pay a 10% early withdrawal penalty for removing funds from your Solo 401k plan. Follow the steps to complete IRS Form 1099-R as above with a regular distribution. However, in Box 7, enter Distribution Code 1- for an Early distribution, no known exception. You may also be required to file IRS Form 5329 which documents the early withdrawal. Again, work closely with your accountant and/or tax preparer to ensure the 10% penalty is properly added to any taxes you may owe on the distribution.

If you are rolling funds out of your Solo 401k plan, you still need to complete and file IRS form 1099-R. The PAYER is the Solo 401k trust. Enter the Solo 401k trust name, Solo 401k trust EIN, and Solo 401k trust address.

The RECIPIENT information varies, depending on where funds will end up. If you are rolling funds out of the Solo 401k and into an IRA, you’ll enter your information (name, SSN, and address) as the recipient. If you are rolling funds out of the Solo 401k and into another qualified retirement plan, you’ll enter the new 401k plan/trust information as the recipient.

Typically when you are rolling funds out of a Solo 401k plan, they will go directly into another retirement plan. This is known as a direct rollover, or trustee-to-trustee transfer. This type of distribution is generally not taxable. Enter Distribution code G in box 7 to denote a direct rollover to another retirement plan.

Once you reach age 72, the IRS requires you begin to take withdrawals from your retirement plan. These are known as Required Minimum Distributions (RMDs). The Solo 401k is not exempt from RMDs and even the Roth 401k will require the plan participant take an RMD. It’s important you work closely with your accountant and/or tax preparer to properly calculate your RMD, take the distribution, and pay any taxes owed. The IRS has helpful RMD worksheets here.

Similar to other distributions where you receive the funds, the PAYER will include Solo 401k information and the RECIPIENT will include your information. If your RMD comes from the pretax portion of your Solo 401k, you will owe taxes on the distribution. If you take the RMD from your Roth 401k, you can enter -0- in box 2a. Enter Distribution code 7 in box 7 for your required minimum distribution.

IRS form 1099-R must be filed by January 31st. As the recipient, you’ll receive a copy of the form by this date. The IRS will expects their copy to be filed by February 28th, or e-filed by April 1st.

If using the 1099-R generator in your Solo401k.com app, you must submit your form by January 25th for the previous year's conversions (if you miss the Jan. 25th deadline, you will need to work with your CPA to complete the filing