Roth Solo 401k vs Roth IRA Comparison Chart

Comparison of Roth Solo 401(k), Roth IRA, and Pre-tax Solo 401(k)
CharacteristicRoth Solo 401k AccountRoth IRAPre-Tax Solo 401(k)
ContributionsEmployee (salary deferral) contributions are made with post-tax dollars.Roth IRA contributions are made with post-tax dollars.Employee (salary deferral) and/or employer (profits sharing) contributions are made with pre-tax dollars.
Income LimitsNo income limitation to contribute.Income limits: married $206,000/single $139,000 modified AGI for 2020No income limitation to contribute.
Maximum Elective ContributionAggregate* employee (salary deferral) contributions limited to $19,500 in 2020 plus an additional $6,500 for employees age 50 or over.Contribution limited to $6,000 for 2020 plus an additional $1,000 for employees age 50 or over.Same aggregate* limit as Designated Roth Solo 401(k) Account; however, participant can also make a profit sharing (employer) contribution.
Taxation of WithdrawalsWithdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:

 

  • On account of disability,
  • On or after death, or
  • On or after attainment of age 59½.
Same as Roth Solo 401k Account and can have a qualified distribution for a first time home purchase.Distributions of contributions and earnings are subject to Federal and most State income taxes.
Required DistributionsDistributions must start no later than age 72.No requirement to begin making distributions while owner is alive.Same as Roth Solo 401k Account.
* This limitation is by individual, rather than by Solo 401k plan. Although permissible to split the annual employee (salary deferral) contribution between designated Roth Solo 401k contributions and pre-tax Solo 401k contributions, the combination may not exceed the deferral limit – $19,500 ($26,000 if you’re eligible for catch-up contributions). VISIT HERE, to read the top 10 differences between a Roth IRA and a Roth Solo 401k, and CLICK HERE TO VIEW educational video. 

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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