Income Restrictions Apply to Roth IRA but not to Roth Solo 401k

QUESTION: I read that the income restrictions that apply to a Roth IRA do not apply to a Roth solo 401k. As a result, I was thinking about opening a solo 401k instead of a Roth IRA and to start making Roth Solo 401k contributions. Can you please confirm that this is true?

 

Regards, 

Jason D. in Arizona

 

ANSWER: While Roth contributions to a solo 401k are technically referred by the IRS as designated Roth contributions, you are correct that the income limits that apply to Roth IRAs do not apply to Roth Solo 401k contributions. Of course, you have to have income from self-employment in order to make solo 401k contributions including the Roth Solo 401k portion.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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