QUESTION:
I don’t plan to do Roth 401k contributions, but I do plan to do non-Roth after tax contributions. Should I create two bank accounts for the solo 401k or can I use one? I will be tracking the pre-tax and non-Roth after-tax contributions in a spreadsheet.
ANSWER:
Separate accounts will be required. Reason being, in order for after-tax contributions to be deemed after-tax contributions they must be deposited in a separate bank/brokerage account labeled with the words “After-Tax” before they can be converted to a Roth IRA, or the Roth solo 401k designated bank/brokerage account.
Below is an illustration of how the accounts are generally titled:
- Nuggets Solo 401k Trust (ROTH) F.B.O. Larry Byrd
- Nuggets Solo 401k Trust (AFTER-TAX) F.B.O. Larry Byrd
- Nuggets Solo 401k Trust (PRETAX) F.B.O. Larry Byrd
