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Keep Solo 401k Open with no business but don’t contribute
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A solo 401k cannot remain open if your self-employed business is closed even if you don’t make new contributions.
A solo 401k is designed for self-employed individuals. If you permanently cease self-employment activities, the solo 401k plan must be closed. This includes formally terminating the plan and transferring its assets to another retirement account, such as an IRA.
The IRS expects the solo 401k to be closed by the end of the year after the business is formally closed with the secretary of state. The plan is tied to your self-employment status. However, if you will be self-employed in a different business, the plan may be updated to list the new business and you can continue with the solo 401k plan.
The assets in the solo 401k can be transferred to a self-directed IRA or another eligible retirement account. This transfer is reportable on Form 1099-R, and a final Form 5500-EZ must be filed to properly wind down the plan.
If you still have some minimal self-employment activity, it may be possible to keep the solo 401k plan open, but you would not be able to make new contributions unless you have qualifying self-employment income.
In summary, a solo 401k cannot remain open indefinitely if the self-employed business is closed and you do not have any self-employment income. The plan must be terminated, and the assets transferred to another retirement account.
mysolo401k.net
What happens to my Solo 401k if I am no longer self-employed? - My Solo 401k Financial
My Solo 401k Financial offers self-directed Solo 401k, IRA LLC & ROBS 401K Retirement Plans. Learn about What happens to my Solo 401k if I am no longer self-employed?
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