• Self Directed IRAs
  • Types of IRAs
  • Investment Options
  • Funding Options
  • Converting to a Roth IRA
  • Distributions
  • Prohibited Transactions
• Health Savings Accounts
  • About HSAs
  • Qualified Medical Expenses
  • Features of HSA Manager
  • Investment Options
  • Funding Options
  • HSA Guidelines
• Solo 401(k)s
  • Eligible Businesses
  • Investment Options
  • Funding Options
  • Roth Solo 401(k)

Roth Solo 401(k) 

The Roth Solo 401(k) is not a separate type of account. Rather, it is an amendment to an existing Solo 401(k). The amendment allows the business owner to earmark contributions as Roth contributions, which they then are responsible for keeping track of. This Roth component of the Solo 401(k) combines the enhanced contribution limits of the Solo 401(k) with the tax advantages of the Roth IRA.

Unlike a Roth IRA, however, Roth contributions to a Solo 401(k) are not subject to any income limits. The business owner can contribute three times as much to a Solo 401(k) than a Roth IRA. See Solo 401k Contribution Limits for more information.

Business owners should be aware that contribution limits, whether to the Solo 401(k) or the Roth Solo 401(k) component, are counted in the aggregate. The limits indicated are for the entire Solo 401(k). Exceeding the allowable limits for each component is not permitted. Important: The five-year holding period on Roth contributions starts on the date of the Roth IRA opening, not the first day of the Roth contributions to the Solo 401(k).

To get the full benefit of making Roth contributions, business owners also may want to open and fund a Roth IRA at the time they begin making Roth contributions to the Roth Solo 401(k).

For more information about opening a Roth IRA, click here.