Roth Solo 401(k)

In 2006, Congress merged two of the most popular types of retirement savings plans—the Roth IRA and the solo 401(k)—into a Roth Solo 401(k).The Roth Solo 401(k) possesses the same benefits of the solo 401(k), but it has the tax benefits of Roth-type contributions. It has the same contribution limits as the Solo 401(k), but you can designate your contributions through salary deferral as Roth contributions.

In 2008, the annual contribution limits are $15,500 if you're under 50 and $20,500 if you're 50 or over. In 2009, the annual contribution limits are $16,500 if you're under 50 and $22,000 if you're 50 or over.   

Why Should I Open a Roth Solo 401(k)?

If you want Roth tax advantages (tax-free distributions) with a substantial contribution limit, the Roth Solo 401(k) is for you. Also, if you're interested in a Roth IRA, but you don’t qualify because of income limits, then the Roth Solo 401(k) is an option to consider.

Eligibility

The Roth Solo 401(k) is available to anyone with an Solo 401(k). It's a benefit to higher-paid employees and self-employed individuals who may have been excluded from having a Roth IRA because of income limitations.