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?



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.

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