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Solo 401k Roth option

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  • Solo 401k Roth option

    I’m in the process of rolling over my Sep IRA at Vanguard to a Solo 401k and plan to keep at Vanguard. My plan is to do this so I could utilize Roth back doors every year. They gave me the option of opening a Solo 401k Roth and/or a pretax solo 401k. I’m not sure what to do. Do I open both and put a portion in the Roth solo 401k? If so, how much do I put in that account per year? Any place I can do some research to make a decision what is right for me? Thanks!

  • #2
    Employer contributions go into the traditional 401(k). Employee contributions are limited to $19,500 total per year into traditional 401(k), Roth 401(k), or some combination of both. (There also is a $6,500 employee catch up contribution starting in the year you turn 50.)

    If your plan allows in-plan conversions, then potentially you can convert additional traditional money into Roth. However, it’s unlikely that you would want to take that tax hit during your peak earning years. Maybe during a year you have a sabbatical or significantly lower earnings for some reason.


    • #3
      I just happened to run across this great comparison of popular custodians who allow solo-k’s, props to The College Investor (I have no relationship with the site owner) for doing the legwork. If anyone has anything to add, please post.
      Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087