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 $183,000/single $125,000 modified AGI for 2012No income limitation to contribute.
Maximum Elective ContributionAggregate* employee (salary deferral) contributions limited to $18,000 in 2016 plus an additional $6,000 for employees age 50 or over.Contribution limited to $5,500 for 2016 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 70½, unless still working and not a 5% owner.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 – $18,000 ($24,000 if you’re eligible for catch-up contributions).

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 >>

  • About MySolo401k

    We help our clients take control of their retirement money. Our products and services provide our clients the freedom to invest their retirement savings in their own business as well as alternative investments such as real estate, private companies, promissory notes, precious metals, tax liens and equities.
    Learn more

    Connect with us

  • We’re here to help.

    Call: 800-489-7571

    Monday-Saturday

    7:00 am - 5:00 pm PT

    Why us?
MENU