Can You Have A Solo 401k and Roth Solo 401k?

When you’re self-employed, planning for retirement often means setting up your own savings strategy. Solo 401k and Roth Solo 401k accounts offer self-employed individuals a way to make potentially higher contributions while managing taxes. These plans are designed for business owners with no full-time employees and can support flexible tax planning if structured correctly.

In this guide, you’ll learn whether you can contribute to both types of accounts, how they differ, and what to consider when deciding how to structure your retirement plan.

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Solo 401(k) eligibility and contribution limits depend on IRS rules. Carry does not provide tax advice, consult a tax advisor. Carry Advisors LLC, an SEC-registered investment adviser, provides investment advisory services for discretionary and non-discretionary accounts (e.g., Solo 401(k), IRA, taxable brokerage accounts). Bank and trust accounts are not advised by Carry Advisors. Brokerage accounts are introduced by Global Carry LLC and carried by DriveWealth LLC, both members FINRA/SIPC. Advisory fees may apply and additional disclosures are described in our Form ADV and CRS.

Can You Have Both a Solo 401k and Roth Solo 401k?

Yes, you can contribute to both a Solo 401k and a Roth Solo 401k, if your plan permits it. 

The IRS allows participants in 401k plans, including Solo 401k plans, to designate some or all of their elective deferrals as after-tax Roth contributions, known as designated Roth contributions.

In a Solo 401k plan, you act as both the employee and the employer. As an employee, you can make elective deferrals up to the annual limit, which is $23,500 for 2025, or $31,000 if you’re age 50 or older. These deferrals can be split between traditional pre-tax contributions and after-tax Roth contributions in any proportion, as long as the total remains within the annual limit.

📝 Note: Employer contributions, which you make as the employer in a Solo 401k, must be made on a pre-tax basis and cannot be allocated to the Roth portion of the account.

Differences Between Solo 401k and Roth Solo 401k

Here’s a simple breakdown of how a Solo 401k and a Roth Solo 401k differ:

Tax Treatment

✅ Solo 401k: Contributions are made with pre-tax dollars, potentially reducing your taxable income now. However, withdrawals in retirement are taxed as ordinary income.

✅ Roth Solo 401k: Contributions are made with after-tax dollars, so there’s no immediate tax break. But qualified withdrawals — including earnings — are tax-free in retirement.

Required Minimum Distributions (RMDs)

✅ Solo 401k: Required Minimum Distributions (RMDs) must begin by April 1 of the year after you turn 73. These withdrawals are taxed as ordinary income, even if you don’t need the funds.

✅ Roth Solo 401k: As of 2024, the IRS no longer requires RMDs from Roth Solo 401k accounts during the account holder’s lifetime. This change allows your savings to potentially grow tax-free for longer and gives you more control over when to withdraw funds.

Contribution Limits

✅ Solo 401k: For 2025, you can contribute up to $23,500 in employee deferrals, or $31,000 if you’re age 50 or older. As the employer, you may also contribute up to 25 percent of your compensation, with a combined contribution limit of $70,000. If you’re between ages 60 and 63, a higher catch-up contribution of $11,250 may apply.

✅ Roth Solo 401k: Roth contributions follow the same annual limits as the Solo 401k. The key difference is how your contributions are allocated within the plan. You may divide your employee deferrals between Roth and traditional, depending on your plan’s setup. Employer contributions, however, must go into the pre-tax (Solo 401k) portion only.

Eligibility and Setup Process

The good news is you don’t need two separate retirement plans. Roth Solo 401k contributions are simply an option within a Solo 401k plan that allows them. To contribute to both traditional and Roth, you’ll need a Solo 401k that supports designated Roth contributions.

Who’s Eligible?

To setup a Solo 401k that includes both traditional and Roth contribution options, you must meet the IRS-defined qualifications for a one-participant plan:

✅ You must have self-employment income. This includes earnings from freelance work, consulting, or operating a business as a sole proprietor, partnership, LLC, or corporation.

✅ You cannot have full-time employees. The plan is limited to business owners with no full-time employees other than a spouse. A full-time employee is generally defined as someone who works 1,000 hours or more in a year.

📌 Also Read: How to Open a 401k Without An Employer

Setting Up a Solo 401k with Roth Option

To make both pre-tax and Roth contributions, your plan must explicitly allow Roth elective deferrals. Here’s how to get started:

📌 Also Read: Solo 401k Important Dates & Deadlines

Wrapping It Up

Using both a Solo 401k and Roth Solo 401k in the same plan is allowed, and for some, it may offer added flexibility. Having the option to make both pre-tax and after-tax contributions could help you manage how your retirement income is taxed later on.

Whether you choose to contribute to a traditional, Roth, or a mix of both Solo 401k options depends on your current income, anticipated future tax bracket, and long-term retirement goals. Many individuals choose to split contributions between the two to maintain flexibility in retirement.

Keep in mind that every financial situation is unique, so it’s often helpful to talk with a qualified tax advisor or retirement planning professional to help you make the most informed decision.

📌 Also Read: No Longer Self-Employed. What Happens to My Solo 401K?

Disclaimer:

The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.

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