A Roth Solo 401k contribution falls under the elective deferral category (employee contribution) and must meet the following guidelines:
- It is irrevocable and included in the solo 401k participant’s gross income.
- Deposited in a Roth designated account under the solo 401k.
- Contributions are held in a separate bank/brokerage account from other solo 401k funds (e.g., pretax).
The annual employee maximum contribution limit (salary deferral under 402(g)) applies to Roth solo 401k contributions. Therefore, for 2015 and 2016 the maximum Roth solo 401k contribution limit is $18,000 per year. For those turning 50 years of age (or older), an additional catch-up amount of $6,000 applies, totaling $24,000 of possible Roth Solo 401k contributions for tax year 2015 and 2016.
Applicable IRS Regulations to Designated Roth Contributions (Roth Solo 401k)
IRC § 402A , IRS Notice 2005-95, Treas. Reg. §1.401(k)-1(f)(1), Treas. Reg. §1.401(k)-6, Treas. Reg. §1.401(m)-5, Prop. Treas. Reg. § 1.403(b)-7(a), Prop.Treas. Reg. § 1.403(b)-5(b)(1)