Allowed to recharacterize contribution from my traditional individual 401k to my Roth individual 401k?

Question

I have a traditional individual 401k (aka 'solo 401k'). I've recently opened a new Roth individual 401k. Am I allowed to recharacterize this year's contribution from my traditional individual 401k to my Roth individual 401k? If so, how would I do this considering that I've already bought stocks with the funds in the former?

Answer 1

You can't recharacterize the solo K into the new Roth 401k.  But, you can rollover the solo K into a Roth IRA, which would essentially be the same as a recharacterization.  You would pay taxes on the pre-tax portion.

Answer 2

Yes, it's very much possible.  You have to file tax form.  The funds can be transferred, and you will be required to pay taxes on the original contribution, assuming it was a deductible traditional IRA.  Call your accountant for more details./

Answer 3

Since you're self employed you could probably do it (get the 401k company to return your money), however it wouldn't be legal.  Once money has been contributed to a trust then it must stay in the trust unless it was due to a mistake in fact and that would be hard to argue in your case since you're self-employed.  If you were to get audited then  you'd be in trouble...better not to taint the whole thing by trying something dodgey and simply utilize the ROTH next year.