I turn 72 next year. I have a single member LLC and have contributed to a SEP-IRA for years. I didn’t realize until now that my LLC could set up a solo 401K or solo Roth 401K. I have already filed my taxes for 2021, so my question is for my 2022 taxes.
If I do not contribute to my SEP-IRA for fiscal year 2022, could I establish a solo Roth 401K this year, contribute $27,000 and then immediately roll it into my existing Roth IRA? Am I correct in thinking that because I am older than 59 1/2 the 5-year rule does not apply? My existing Roth IRA was established more than 5 years ago.
Followup to my previous question: Would it be better to set up a solo 401K that allowed after-tax contributions, contributed the maximum pre-tax amount and the maximum after tax amount and then converted the entire amount to my existing Roth IRA? I assume I would have to pay tax on the conversion of the pre-tax contribution – OR – can I set up a 401K plan that allows after-tax contributions without requiring pre-tax contributions? Once my RMDs kick in next year my marginal rate may be higher than it will be this year, which is why I am more interested in after tax contributions for 2022. I don’t want to add to my income by converting an IRA, but I would like to get all of this year’s income that I have to pay tax on anyway into a Roth.