|Comparison of Roth Solo 401(k), Roth IRA, and Pre-tax Solo 401(k)|
|Characteristic||Roth Solo 401k Account||Roth IRA||Pre-Tax Solo 401(k)|
|Contributions||Employee (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 Limits||No income limitation to contribute.||Income limits: married $206,000/single $139,000 modified AGI for 2020||No income limitation to contribute.|
|Maximum Elective Contribution||Aggregate* 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 Withdrawals||Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:|
|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 Distributions||Distributions 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.|
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