What constitutes as separation of service with regards to sole proprietors being able to roll over their solo 401k employee deferrals prior to turning 59.5?

This comment was posted to reddit on Aug 30, 2018 at 5:34 pm and was deleted within 11 minutes.

What constitutes as separation of service with regards to sole proprietors being able to roll over their solo 401k employee deferrals prior to turning 59.5?

they affect the IRA Roth conversion pro rata rule

Can you explain that more? I'm new to that rule.

I’m sure there are other disadvantages.

I believe with the SEP, you can only contribute 20 or 25% of compensation to the IRA. With the Solo 401k, you can contribute 18.5k + 20% of compensation. (Then both capped at like $54k). For someone making, say, $30k/yr in self-employment income, SEP allows you to put in 6k to 7.5k, and solo 401k allows you to put in 18.5 + 6k = 24k (though slightly less for math rules reasons I don't yet understand). I was going to go with solo 401k just because I'd rather tax-defer $24k than 6k, but I barely know what I'm doing.

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What constitutes as separation of service with regards to sole proprietors being able to roll over their solo 401k employee deferrals prior to turning 59.5?

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