What is a Roth Solo 401k Plan? What is a Solo 401k Plan?
Understanding Roth Solo 401(k)s
requires that we first understand the basics of traditional Solo 401k plans
401K Plans, creatively named after Section 401(K) of the Tax Code
, are Defined Contribution qualified retirement plans
that allow employees to choose (“elective
deferral”) to contribute all or part of their compensation to a tax-advantaged account and exclude the amounts contributed from current taxable income. The tax code calls this a “cash or deferred arrangement,” or CODA. A 401k Plan can be combined with other types of plans, such as Defined Benefit and Cash Balance Plans
, to maximize tax deductions
and allow for multiple forms of plan contributions. The typical 401(k) Plan provides for employer profit sharing contributions
, in addition to employee contributions
. Self-Directed Solo 401(k) Plans
are 401(k) plans for businesses that don’t have full-time employees other than business owners and their spouses, which can be designed to include very attractive features such as Roth 401k Contributions and After-Tax Employee Contributions.
What is a Roth Solo 401k Plan?
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