Many self-employed professionals, consultants, and real estate investors open a Fidelity Solo 401(k) thinking it offers every modern retirement feature. But here’s the surprise — Fidelity’s Solo 401(k) does not allow after-tax contributions or the Mega Backdoor Roth strategy.
Watch: Learn how you can use a solo 401k form My Solo 401k Financial in conjunction with Fidelity for making Voluntary After-Tax Solo 401k Contributions
If you’re serious about maximizing tax-free retirement growth, understanding this distinction can save you tens of thousands in missed opportunities each year.
Understanding Solo 401(k) Contribution Types
A Solo 401(k) can include three types of contributions:
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Pre-Tax (Traditional) – Lowers taxable income now; taxes are paid later at withdrawal.
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Roth – Taxes are paid upfront, but future growth and withdrawals are tax-free.
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Voluntary After-Tax – Made after taxes, then converted to Roth via the Mega Backdoor Roth method.
That third bucket — the voluntary after-tax contribution — is what unlocks the Mega Backdoor Roth advantage. It allows much larger Roth contributions than the normal Roth limits.
Why Fidelity Solo 401(k) Falls Short
While Fidelity offers a solid basic Solo 401(k), it does not permit voluntary after-tax contributions. That means:
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❌ You cannot execute a Mega Backdoor Roth within the Fidelity plan.
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❌ You’re limited to employee and employer contributions only.
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❌ You miss out on potentially tens of thousands in Roth dollars each year.
In contrast, My Solo 401k Financial plans are specifically designed to support after-tax contributions as part of the mega backdoor Roth strategy, in-plan Roth conversions, participant loans, and even alternative investments such as real estate, crypto, and private equity.
Eligibility to Open a Solo 401(k)
Whether you open a Fidelity or a My Solo 401k Financial plan, the eligibility rules are the same:
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You must be self-employed or run a business with no full-time W-2 employees (except a spouse).
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Part-time employees working under 1,000 hours/year can be excluded.
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Contractors (1099-NEC) don’t count as employees.
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Spouses working in the business can join the same plan, doubling contribution potential.
2025 Mega Backdoor Roth Example
For tax year 2025, the total Solo 401(k) contribution limit is $70,000 (or $81,250 for ages 60-63 with the new “super catch-up”).
With My Solo 401k Financial plan, you can contribute up to the full $70,000 to the after-tax bucket and then convert it to the Roth Solo 401(k) or a Roth IRA — creating substantial tax-free retirement growth.
Example: A married couple, each earning $70,000 in W-2 wages from their business, could each contribute $70,000 after-tax and convert it — resulting in $140,000 of Roth Solo 401(k) contributions in a single year.
How the Conversion Works
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Make the voluntary after-tax contribution to your Solo 401(k).
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Convert it to the Roth Solo 401(k) or Roth IRA using Fidelity’s One-Time Withdrawal – Investment Only form.
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File IRS Form 1099-R to report the conversion — handled by My Solo 401k Financial as part of our annual service.
This process is seamless when your plan is properly structured for the Mega Backdoor Roth.
Transitioning from Fidelity to My Solo 401k Financial
Already have a Fidelity Solo 401(k)? You don’t need to liquidate or move funds elsewhere.
My Solo 401k Financial can restate your existing Fidelity plan into a self-directed Solo 401(k) that allows:
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Voluntary after-tax contributions
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Mega Backdoor Roth conversions
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Participant loans
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Multiple holding accounts (pre-tax, Roth, after-tax)
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Alternative investments
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$1,500 IRS auto-contribution tax credit
Funds stay at Fidelity — they simply move internally to new, properly titled accounts under your upgraded plan.
Bottom Line
Fidelity’s Solo 401(k) may be convenient — but it’s not designed for advanced Roth strategies.
If you want full control, maximum contribution flexibility, and true tax-free growth potential, a self-directed Solo 401(k) from My Solo 401k Financial is the clear choice. To compare the two solo 401k plans, please click here.
