| Roth IRA | Roth Solo 401k | |
| Self Trustee | IRA custodian required by law | Solo 401k owner can serve as trustee and custodian |
| Participation | Anyone with earned income | Only if the Solo 401k plan document allows for Roth Solo 401k contributions |
| Contribution limits | For 2020
$6,000 $7,000 (if age 50 or older) |
For 2020
$19,500 $26,000 (if age 50 or older) |
| Recharacterization of rolled over amounts | Permitted for conversions processed prior to the Jobs Act of 2017 | Not permitted |
| Required Minimum distributions | Only after original IRA owner’s death | Yes |
| Tax on nonqualified distributions | Nonqualified distributions are distributed in following order:
|
Nonqualified distributions are pro-rated between Roth Solo 401k contributions (nontaxable) and gains (taxable) |
| Withdrawals | Anytime. Maybe subject to tax if not a qualified distribution. | Only when allowed by the terms of the plan. Subject to tax if not a qualified distribution. |
| Loans | No | Yes, if plan contains feature |
| 5-year holding period for qualified distributions | Begins January 1 of the year a contribution is made to any Roth IRA | Separate for each Roth Solo 401k account and begins on January 1 of the year contributions made to that account. If one Roth Solo 401k is rolled into another, the earlier start date applies. |
| Beneficiary | Anyone | Anyone but, if married, spouse must consent to nonspouse beneficiary |
