Solo401K – Account types and uses

[Arun R.]

Hello, How do I use the Non-Prototype ROTH and after tax accounts? Would the max contribution (employer and employee) amounts shared between Pre-tax and ROTH, After tax accounts? Also, can I contribute pretax employee and employer together or do they need to be delivered seperately?

Arun R.

Contact

[Mark Nolan]

1. Just like pretax contributions can only be made based on net self-employment income, the same rules apply to after tax contributions–that is, after-tax contributions are also based on net self-employment income from the business that sponsors the solo 401k plan. In other words, the solo 401k rules do not allow for contributions based on your personal funds or wages from a full-time employer, for example.

2. They are separate. The Roth solo 401k contributions must be deposited into a separate holding account specifically for holding the Roth solo 401k contributions. Same with the voluntary after-tax solo 401k funds, they must be deposited into a separate holding account. You can make just voluntary after-tax solo 401k contributions without making Roth solo 401k or pretax solo 401k contributions. In other words, you are not required to make Roth solo 401k contributions or pretax contributions at all.

See the following for more: https://www.mysolo401k.net/solo-401k/making-year-2023-annual-solo-401k-contributions-pretax-roth-and-voluntary-after-tax-a-k-a-mega-backdoor/

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net