Converting property in 401k to Roth

My Solo 401k Trust owns a rental property.  If I determine that it is better to pay the taxes on the value in the 401k now, could I convert the property and other cash in the account into a Roth 401k without selling and liquidating the property?

Answer:

You can convert property and other assets in your 401k into Roth. This will be taxable event so I strongly suggest you discuss this with your CPA.

For a Roth conversion of property, you must use a licensed third party appraisal to determine the accurate value of the property.  The appraisal must be dated as close as possible to the taxable event.

You will then need to complete a Roth Conversion form (located in Miscellaneous Forms). Your 401k will need to issue a 1099-R to you in the year following the conversion, and you will have to declare that as taxable income on your tax return. You are responsible for filing 1099-R on behalf of your plan.