|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.|
ROBS 401k Funding Process
Solo 401k Investment Rules
IRA LLC Setup Process
About MySolo401kWe 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.
Connect with us
We’re here to help.
7:00 am - 5:00 pm PTWhy us?