A Solo 401k, sometimes called an individual 401k, is one of the most powerful retirement savings vehicles available to self-employed individuals and business owners with no full-time employees. During your working years, a Solo 401k allows for high contribution limits, broad investment flexibility, and meaningful tax advantages that are difficult to replicate with other retirement plans. Because of these benefits, many entrepreneurs accumulate a large portion of their retirement wealth inside a Solo 401k.

Once you retire or permanently stop self-employment, however, the role of your Solo 401k changes dramatically. At that stage, many retirees begin asking a critical question: What should I do with my Solo 401k after I retire? The answer is rarely one-size-fits-all, because the decision affects taxes, required minimum distributions, retirement income planning, investment risk, and long-term estate efficiency.

At Diversified Insurance Brokers, we help retirees understand how Solo 401k assets should fit into a broader retirement strategy that may also include IRAs, pensions, annuities, taxable investments, and Social Security. Planning ahead can reduce unnecessary taxes, prevent avoidable distribution mistakes, and create a more predictable retirement income structure.

Why a Solo 401k requires special planning after retirement

Unlike a traditional employer-sponsored 401k, a Solo 401k exists specifically because of active self-employment or owner-only business income. While you are working, the plan functions like a high-powered savings engine. Once that business activity stops, however, the account no longer serves its original purpose as a contribution vehicle, and it often becomes more of an administrative container than a planning advantage.

Many custodians allow Solo 401k plans to remain open after retirement, but keeping the plan indefinitely can be inefficient. Some plans retain administrative requirements, investment access can be narrower than an IRA depending on the custodian, and the account will eventually face required minimum distributions. For many retirees, the simplest and most flexible path is eventually rolling the Solo 401k into an IRA structure that’s easier to manage and coordinate across the household.

This is why retirees frequently evaluate rollover strategies early—before required distributions begin—so they can control the timing of taxes and build a smoother income plan.

What happens to a Solo 401k when you retire?

Retirement itself does not automatically close a Solo 401k. However, once you no longer have self-employment income, you generally cannot make additional contributions. At that point, the account shifts from accumulation to distribution. That shift matters because the “best” retirement plan is rarely about maximum growth alone. It’s usually about predictable cash flow, tax control, and protecting the household from a major market drop at the wrong time.

Most retirees evaluate a few practical directions: rolling the Solo 401k into a Traditional IRA, converting portions to a Roth IRA over time, integrating assets into another employer plan (when available), or repositioning part of the account into protected income strategies that reduce sequence-of-returns risk. The right answer depends on your total income picture and how soon you need withdrawals.

Rolling a Solo 401k into a Traditional IRA

One of the most common strategies after retirement is rolling a Solo 401k into a Traditional IRA. In many cases, this preserves tax deferral while simplifying account management and expanding investment flexibility. Retirees often like this move because it makes coordination easier—especially when the household has multiple accounts across different custodians.

This approach closely mirrors what many retirees do with employer-sponsored plans, as discussed here: What Should I Do With My 401k After I Retire?. In both cases, the goal is reducing complexity while improving retirement-phase flexibility.

It’s important to understand what this move does and does not solve. A Traditional IRA rollover can make management easier, but it does not eliminate required minimum distributions. When RMDs begin, withdrawals become mandatory and can increase taxable income—especially if you also have Social Security, pension income, rental income, or business income. That’s why many retirees pair rollover decisions with longer-term tax planning.

Using Roth conversions after retirement

Another strategy retirees explore is converting some of the Solo 401k value into a Roth IRA. Roth conversions create taxable income in the year you convert, but they can reduce long-term tax exposure when used intentionally. Retirees often use Roth conversions to build future tax-free income, improve estate efficiency, and reduce the size of future required distributions from pre-tax accounts.

Rather than converting everything at once, many retirees perform partial Roth conversions over several years to stay within specific tax brackets. This approach is often coordinated with other plan types and household accounts, including the strategies discussed here: What Should I Do With My SIMPLE IRA After I Retire? and What Should I Do With My 403b After I Retire?.

In real life, Roth conversion planning is usually about timing. Some retirees have a “lower-income window” early in retirement before Social Security starts or before RMDs kick in. When that window exists, partial conversions may help smooth taxable income over time instead of creating sharp spikes later.

Using a Solo 401k to support retirement income

Once retirement begins, the focus typically shifts from accumulation to income. A Solo 401k built for growth may need to be repositioned so it can support predictable cash flow and long-term stability. Some retirees rely on systematic withdrawals from IRA rollover accounts. Others allocate part of their assets toward protected income strategies designed to reduce market volatility and improve planning certainty.

For retirees who want to reduce risk and create more predictable outcomes, annuity-based strategies are often evaluated as part of a broader retirement income plan. This is typically not an “all or nothing” decision. Many retirees blend a protected bucket with an investment bucket so they can meet income needs while keeping flexibility and long-term upside where it makes sense.

If you’re weighing guarantees versus market exposure, these pages may help frame the decision: Are Annuities Worth It? and Are Annuities a Good Investment?.

Required minimum distributions and tax planning

Solo 401k plans are subject to required minimum distributions once you reach the applicable age under current IRS rules. These mandatory withdrawals can raise taxable income, especially when combined with other income sources. That increase can affect tax brackets and, for some retirees, the taxation of Social Security benefits and other income-related thresholds.

Because Traditional Solo 401k assets do not allow lifetime RMD avoidance the way Roth IRAs do, many retirees plan years in advance. The goal is often to control how and when taxes are paid, instead of letting RMDs force the timing later. This becomes even more important if you also have a pension, because pension income adds another predictable taxable layer, as discussed here: What Should I Do With My Pension After I Retire?.

The risk of doing nothing

One of the most common mistakes retirees make is leaving a Solo 401k untouched simply because it feels familiar. Over time, that “do nothing” approach can create problems: unplanned RMD tax spikes, missed Roth conversion windows, poor income coordination across accounts, and ongoing administrative friction with a plan that was never designed for retirement distribution simplicity.

Even if you don’t want to make immediate changes, reviewing your Solo 401k strategy early usually creates more options. It’s easier to make intentional moves when you have time than to react when taxes rise or withdrawals become mandatory.

How Solo 401k planning fits into your overall retirement strategy

Your Solo 401k is one part of the retirement picture. It needs to work in coordination with IRAs, taxable accounts, Social Security, pensions, and insurance-based planning strategies. While each account type has different rules, the planning objective is usually the same: improve after-tax retirement income, reduce avoidable risk, and create a structure that’s easier to manage over time.

If you’re coordinating multiple plan types, these pages can help you think through the broader rollover landscape: What Should I Do With My 401a After I Retire?, What Should I Do With My TSP After I Retire?, and What Should I Do With My Profit Sharing Plan After I Retire?.