In this conversational segment, Mark Kohler and Matt walk through practical ways to transfer money from a current employer‑sponsored 401(k) into a self‑directed solo 401(k) or IRA. They begin by explaining that any side‑business entity (sole proprietorship, LLC, S‑corp) can establish a solo 401(k) as a prerequisite for receiving rollovers. They then describe the “backdoor 401(k)” technique where a rental‑property owner can pay themselves for managing the rentals, thereby creating deductible compensation that can be contributed to a 401(k). The bulk of the discussion focuses on in‑service rollovers: (1) full rollovers allowed once the participant reaches plan‑specified retirement age (often 59½, sometimes 55); (2) partial in‑service rollover withdrawals for younger participants, which are permitted by roughly 60 % of plans but often limited to employer matching contributions. Matt emphasizes the administrative difficulty of accessing these options, noting that frontline HR or plan administrators may be unaware of the rules and that escalation is usually required. Mark adds that many employers and their broker‑dealers are reluctant to let participants move money out, so persistence (“the squeaky wheel”) is essential. He shares an anecdote about a client who temporarily quit and was rehired the next day to trigger a rollover, illustrating an extreme but sometimes effective workaround. The overall message is that while legal mechanisms exist, extracting funds while still employed often requires deep knowledge of plan provisions, aggressive follow‑up, and occasionally creative employment maneuvers.
Chapters
Foreign. Okay, so Tico has a 401k right now from a current employer. And he says, now the trick here with the solo, we got to get that step done too. So if I was on a phone call with Tico, I'd go, okay, what's your side business? What do you do? And he says, well, I sell crap on ebay or Etsy, or I do Amazon resell, or I run a landscaping business, or I work on the weekends doing this, that, and or another. So if you've got a little sole proprietorship or a little LLC or maybe an S corp, any of those entities, any one of them could create the solo 401k. So that's step one. We got to get this 401k up so that we can even try to get money into it. Now, some people use the backdoor 401k strategy, and that is if you have rental property, you can't fund a 401k from rentals, but you can pay yourself to manage your own rentals. Zero out the profit by funding a 401k. Now, Matt, this is where it gets tricky. If you have a current job with a current 401k, there might be some vesting or some, you know, I don't know. Matt, what are the words you use to talk about not quitting your job, but still trying to do a little rollout of some money? What are the methods?
Couple options there. So if you're still employed by that same employer, there's a few ways to get it out. The first is if you've reached retirement plan age, which in Most plans is 59 and a half, some are 55. And they'll say you can do what's called an in service rollover of the entire amount in your current employer, 401K or 403B or whatever company plan you have, once you're at retirement age under the plan, which is the latest, they can set that as 59 and a half. And many, many do. So if you're like, I'm 60, I've got half a million bucks in here, you could roll the whole thing out to an ira. Order your own solo K if you want it. Now, let's say you're like, nah, I'm 45, I'm not there yet. And but I got a bunch of money I want to peel out of it because I want to get it to a solo K. And maybe I want to self direct and do some of these cool things you guys are talking about that I can't do. I can just buy mutual funds. In my, you know, day job. Corporate 401k. There is something called an in service rollover or withdrawal where you can take out a portion of the 401k. Now, I've seen statistics that say about 60% of employer 401k plans allow for an in service rollover withdrawal. I've helped many clients over the years get this. Frankly, it's more of an administrative nightmare in getting it pulled off than it is anything else. But they're not going to send you the money, okay? They got to send the money to another retirement account. Like a 401k, your solo k if you get one set up or an IRA or something like that. Now, the plan does not have to allow that. It's kind of a permissible thing if they want to let you do it. But I'm surprised by the statistics. I've seen my experiences. It's more like a fourth of company 401k plans allow you to roll money out, but it's only the company matching money, which makes no sense. You'd think it would be the employee contributions you put into the 401k overtime. Nope, it's actually the company matching funds.
Really? Okay.
Yeah. What they let you roll out. So look for that, if you're like, hey, I've got a big 401k, I've worked here for a long time. The company's thrown in a bunch of money over the years. That's usually the bucket you can roll out even while you're still employed and even before you're at retirement Plan H of 59 and a half. So I've seen a lot of clients do it. It's kind of like you're not going to get that answer on the first person you call at your 401k administrator. Okay? This is not like the front line of defense of those companies. Do not know what the heck this is. It's called an in service rollover withdrawal. You may have to go up the food chain a couple steps to get someone that knows what the heck it is.
And I throw this out. Tico and any of you out there that are currently employed with a 401k and you're like, how can I invest that? Better make some noise. And you don't want to get fired. But if you go to the HR department and start calling them up going, hey, I need to roll this out. I need to roll it to an IRA. I've got another 401k, I want to roll it out. And you Know, the squeaky wheel gets the grease and you start going up the chain. Sometimes that option's there. I'll tell you, they don't want you to take the money because their broker dealer, that's got all this money under their control, the last thing they want to do is let you take any of your money out. And so it's not even your half the time. Your employer is like, I don't know, call Fidelity, call whoever. So nine times out of 10, your employer is not even going to know you're making noise. You're just calling the stupid broker dealer going, what are the provisions? I send me a copy of my freaking 401k. And you're entitled to that. It's your money, it's just, when do you get it? So I just tried Wall street, drives me crazy. Now, I did have a client once, it's kind of funny, she worked at Wells Fargo and she was like mid level exec, been there almost her whole life. She had like a half a million $401k, and she hated that she couldn't invest it the way she wanted, but they loved her there. And she went into her vice president, whatever and said, hey, I need you to fire me on Friday, let me take a day off on Monday and rehire me on Tuesday, and I want to roll out my 401k. And he goes, that's all you want to do? And it goes, yep. And the stupid broker dealer won't let me do it unless you fire me. Now, I don't recommend this for anybody out there that might not get rehired, but she was confident enough and she was a little older. Anyway, like I said, she'd been there most of her life. So they, if they didn't rehire her, she was like, screw you anyway. But they were like, no, no, no, no. Okay, let's just do it. So administratively, they let her go. She filed the paperwork and on the next day they rehired her and she was able to roll out all her money. Now, I'm not saying you can do that at every company, I'm not saying you could, you know, recommend that. But if there's a will, sometimes there's a way. Just be pushy and see if it.
