Client has taken distributions from his solo 401(k) plan in 2018. He was a real estate consultant and lost his only client in early 2018. the last income was in the 1st quarter of 2018.
Question – under the separation from service exception for the penalty. Would closing your own self-employed business down be considered an “separation” for the exception? I’ve looked at the wording of the exception and it does reference “employee” and I don’t find anything on point regarding self-employed.
Would self-employed taxpayers qualify? What steps might be advised to support the separation from service. (there was NO LLC involved).