Transferring my self employed 401k account to my Sep-IRA?

[Guest skipos]

I would like to tranfer my self employed 401k account (through Schwab) to my SEP-IRA account (through OptionsXpress) for various reasons. I also have a ROTH IRA (through OptionsXpress) that I would like to transfer to my SEP-IRA account as well. It is inconvenient to have my money spread out over a few accounts. Are there any tax consequences for transfers like this?

My wife has a similar situation. She has a 401k from a former employer she will never work for again, a ROTH IRA and a ROTH CONVERSION from her childhood, and it sure would be more convenient if it was all under her ROTH IRA account.

Any thoughts or links to info would be greatly appreciated.

[401king]

According to this chart: http://www.irs.gov/pub/irs-tege/rollover_chart.pdf you are allowed to roll a 401k into a SEP IRA account.

Your wife can convert her 401k into a Roth and have it rolled into her Roth conversion account. Obviously, she would need to pay taxes on the converted amounts.

[Lou S.]

Are you terminating the 401(k) or are you over age 59 1/2? If not, I'm not sure you have a distributable event. I assume by self-employeed 401(k) you are the owner (Sch C or K-1 income) as such it is often difficult to convince the IRS you have a seperation from service for taking your money out.

[Guest skipos]

Thanks for the responses. Lou S, I am the sole owner and employee, so I can terminate my 401k if it makes it easier to consolidate. I am under the impression that I may have to do that if I want everything to put it in my sep-ira account, right? From that chart, it looks like I could put everything in my Roth IRA. Hmmm, I have to figure out what is best, and this stuff doesn't come naturally to me.

[Lou S.]

Yes to consoldate to the SEP-IRA you would need to formally terminate the 401(k) if you are under 59 1/2, otherwise you can't take a distribution from the 401(k). If you do terminate the 401(k) you would not be able to start a new 401(k) for 12 months if that matters to you. Don't forget the final 5500 and 1099-R if you do term the 401(k).

Yeah you could convert everything to ROTH, though you should probably check with your tax professional to see the impact of that first as we don't really know your financial situation here.