Roth Solo 401k Tax Benefits
The tax benefits of the Roth Solo 401k combine the advantages of a Solo 401k with a Roth IRA. With the Roth Solo 401k, you can grow, invest, and transfer your retirement funds- all tax-free.
A Solo 401k is a traditional 401k that has been simplified for the self-employed and small business owner. You must have self-employment to qualify. And that self-employment can occur on a part-time basis and in conjunction with full-time employment elsewhere.
So the Roth Solo 401k is a Solo 401k with Roth capability. It is funded by post-tax dollars.
Curious to find out more about the tax benefits? Read on.
Roth Solo 401k tax benefits: Tax-free growth
Funds within the Roth Solo 401k grow tax-free. Participants can contribute up to $23,000 per year to the Roth Solo 401k. Thus those funds can grow tax-free within the plan.
Then, once the account has been held for five years and the participant reaches age 59 1/2, distributions can be taken from the account, also tax-free.
Tax-free investing
The Roth Solo 401k gives unlimited investment options for tax-free investing. Invest your Roth Solo 401k in both traditional and non-traditional assets. Participants invest their Roth Solo 401k in real estate, notes, private businesses, precious metals, just to name a few.
With its unlimited investment capability, you can achieve true diversification of savings. Because the plan can be invested in a variety of assets, your account’s health and growth is not subject to one market. This gives greater security and growth potential for your retirement funds.
Tax-free transfer
In addition, you can pass your retirement savings to your beneficiaries tax-free through the plan. This can include children, spouse, and grandchildren. Aa a result, the beneficiaries receive tax-free use of the funds.
The Roth Solo 401k is a powerful retirement vehicle. Its tax benefits include: tax-free growth, tax-free investing, and tax-free transfer. Contact one of our specialists today for a free consultation.