Solo 401(k) Roth Contributions: Complete Guide for Self-Employed

The solo 401(k) is the most powerful retirement vehicle available to self-employed individuals. It combines the high contribution limits of employer-sponsored plans with the flexibility to include Roth contributions—and if you set it up right, even Mega Backdoor Roth.

If you’re a sole proprietor, single-member LLC owner, S-Corp owner, or partner with self-employment income, this guide covers how to maximize Roth contributions through your solo 401(k).

What are Solo 401(k) Roth contributions and who qualifies?

Solo 401(k) Roth contributions are after-tax employee deferrals made to an individual 401(k) plan for self-employed individuals with no full-time employees (other than a spouse). For 2026, you can defer up to $24,500 as Roth ($32,500-$35,750 with catch-up), plus make employer profit-sharing contributions of up to 25% of compensation. Total contributions can reach $72,000-$83,250 depending on age. You qualify if you have self-employment income from a sole proprietorship, single-member LLC, S-Corp, or partnership, and have no common-law employees working 1,000+ hours/year. Solo 401(k)s with Roth features give self-employed owners the same tax-advantaged options as large company 401(k) plans.

Key Takeaways

• Dual contribution structure — Employee deferrals ($24,500) + employer profit sharing (25% of comp) = massive contribution potential
• Roth option for employee deferrals — Choose Roth, traditional, or split for your $24,500 deferral portion
• Employer contributions are always pre-tax — The 25% profit-sharing goes to traditional regardless of your deferral choice
• Mega Backdoor Roth potential — Some solo 401(k) providers allow after-tax contributions + in-plan Roth conversion
• Clean slate for backdoor Roth IRA — Roll old IRAs into your solo 401(k) to avoid the pro-rata rule
• Must have self-employment income — W-2 income from another job doesn’t qualify (but you can have both)

Solo 401(k) Basics

Who Qualifies

Eligible:

• Sole proprietors (Schedule C income)
• Single-member LLC owners (Schedule C or S-Corp election)
• S-Corp owners (with W-2 salary from the S-Corp)
• Partners in a partnership (for their self-employment income)
• Spouses working in the business

Not Eligible:

• Businesses with common-law employees working 1,000+ hours/year
• Part-time employees under 1,000 hours are generally okay (check plan document)

Two Types of Contributions

Employee Deferrals (Your Contributions):

• Up to $24,500 in 2026 ($32,500-$35,750 with catch-up)
• Can be traditional (pre-tax) OR Roth (after-tax)
• You choose the split

Employer Contributions (Profit Sharing):

• Up to 25% of compensation (20% for sole proprietors after SE tax adjustment)
• ALWAYS pre-tax (goes to traditional side)
• You can make both types, up to the overall 415(c) limit

Roth vs. Traditional Deferrals

You can split contributions—$12,000 traditional and $12,500 Roth, for example. See our Roth 401(k) vs traditional 401(k) comparison for the full decision framework.

2026 Contribution Limits

Full Limit Breakdown

Calculating Your Maximum

For S-Corp Owners:

Your W-2 salary from the S-Corp determines both your employee deferral capacity and your employer contribution base.

• Employee deferral: $24,500 (+ catch-up if eligible)
• Employer contribution: 25% of W-2 wages
• Total: Sum of both (capped at 415(c))

Example: S-Corp owner, age 45, $200,000 W-2 salary

• Employee deferral: $24,500
• Employer (25% of $200,000): $50,000
• Total: $74,500… but capped at $72,000

For Sole Proprietors:

The calculation is different because you don’t have a W-2. You calculate off net self-employment income.

• Net SE income – 1/2 SE tax = “Adjusted net”
• Employee deferral: $24,500 (+ catch-up)
• Employer contribution: 20% of adjusted net (not 25%)

Example: Sole proprietor, age 52, $300,000 net SE income

• SE tax: ~$23,310
• 1/2 SE tax: $11,655
• Adjusted net: $288,345
• Employee deferral: $32,500 (includes catch-up)
• Employer (20% of $288,345): $57,669
• Total: $90,169… capped at $80,000 (with catch-up)

Roth Contributions vs. Traditional

Tax Treatment Differences

Traditional deferral:

• Reduces current taxable income (deduction)
• Grows tax-deferred
• Taxed as ordinary income on withdrawal

Roth deferral:

• No current tax reduction
• Grows tax-free
• Qualified withdrawals are tax-free

When to Choose Roth

• You’re in a lower bracket now than you expect later
• You want tax diversification
• You expect tax rates to rise
• SECURE 2.0 forces Roth catch-up (if $150,000+ prior-year wages)

When to Choose Traditional

• You’re in a high bracket (32%+) and expect lower in retirement
• You need the deduction to manage estimated tax payments
• Your business had a high-income year you want to offset

The Employer Contribution Quirk

Here’s something many people miss: employer profit-sharing contributions are always pre-tax—even if you choose 100% Roth for your employee deferrals.

So if you contribute:

• $24,500 Roth (employee deferral)
• $47,500 employer profit sharing

You’ll have $24,500 in Roth and $47,500 in traditional, regardless of your preferences. You can’t make employer contributions as Roth.

Mega Backdoor Roth with Solo 401(k)

If you want to push even more into Roth, the Mega Backdoor Roth strategy can add $12,000-$47,500+ to your annual Roth contributions. But your plan needs specific features to enable it.

What Is the Mega Backdoor Roth?

The Mega Backdoor Roth involves:

1. Making after-tax contributions (beyond your regular deferrals)
2. Converting those after-tax amounts to Roth (in-plan or via rollover)

This dramatically increases Roth accumulation potential beyond the $24,500 deferral limit. See our backdoor Roth vs mega backdoor Roth guide for the complete breakdown.

How It Works with Solo 401(k)

Step 1: Max regular contributions

• Employee deferral: $24,500 (Roth or traditional)
• Employer profit sharing: 25% of comp

Step 2: Calculate remaining 415(c) room

• 415(c) limit: $72,000 (no catch-up example)
• Less: deferrals + employer contributions
• Equals: After-tax contribution room

Step 3: Make after-tax contributions

• Contribute the remaining amount as “after-tax” (not Roth, not pre-tax)

Step 4: Convert to Roth

• In-plan Roth conversion moves after-tax to Roth 401(k)
• OR roll out to Roth IRA

Example Calculation

You can contribute $12,500 after-tax, then convert to Roth. Total Roth: $24,500 (deferral) + $12,500 (converted) = $37,000

Provider Considerations

Providers that support after-tax + conversion:

• MySolo401k.net (specifically designed for this)
• Some custom plans through Fidelity or Schwab (requires customization)

Providers that DON’T support after-tax:

• Standard Fidelity solo 401(k)
• Standard Schwab solo 401(k)
• Standard Vanguard solo 401(k)

Important: Most off-the-shelf solo 401(k)s don’t allow after-tax contributions. You may need a custom plan document, which typically costs $99-$400/year.

Solo 401(k) as Pro-Rata Rule Solution

One of the biggest advantages of having a solo 401(k) is solving the pro-rata problem for backdoor Roth IRA.

The Problem

If you have pre-tax money in traditional IRAs (including rollover IRAs from old 401(k)s), the pro-rata rule makes your backdoor Roth IRA conversions partially taxable. See our pro-rata rule guide for the full explanation.

The Solution

Roll your pre-tax IRAs INTO your solo 401(k). Once the money is in a 401(k), it doesn’t count toward the pro-rata calculation for IRA conversions.

Step-by-Step:

1. Open solo 401(k) with rollover acceptance feature
2. Initiate rollover from Traditional/Rollover/SEP IRA to solo 401(k)
3. Wait for rollover to complete
4. Now contribute to Traditional IRA (non-deductible) and convert to Roth
5. 100% tax-free conversion (no pre-tax IRA money to trigger pro-rata)

What You Can Roll In

• Traditional IRA
• Rollover IRA
• SEP IRA
• SIMPLE IRA (after 2-year participation)
• Old 401(k)s from previous employers

Limitation: You generally can’t roll employer contributions from a current-year SEP if you’re still making SEP contributions in the same year. Check with your CPA.

Setting Up a Solo 401(k) with Roth

Provider Comparison

If you want Mega Backdoor Roth (after-tax contributions), you’ll need MySolo401k or a similar custom plan provider. The major brokerages don’t support it in their standard solo 401(k) offerings.

Required Documents

• Plan adoption agreement
• Plan document
• IRS determination letter (or use provider’s pre-approved plan)

Deadlines

Plan establishment: By December 31 of the year you want to contribute for.

Contributions:

• Employee deferrals: December 31 of the contribution year
• Employer contributions: Tax filing deadline (including extensions)

EIN Requirement

Your solo 401(k) needs its own EIN—separate from your business EIN. Apply via IRS Form SS-4 online. It takes about 5 minutes and you get the EIN immediately.

Coordination with Other Retirement Accounts

If You Have W-2 Income from Another Job

The $24,500 deferral limit is per person, not per plan. If you defer $10,000 at your W-2 job’s 401(k), you can only defer $14,500 at your solo 401(k).

However, employer contributions are calculated separately for each plan. Your solo 401(k) employer contribution (25% of self-employment income) doesn’t affect your W-2 employer’s match.

SEP IRA vs. Solo 401(k)

Winner: Solo 401(k) for most situations. The only advantage of SEP IRA is simpler setup.

Can I Have Both?

Yes, but employer contribution limits are aggregated across all plans. If you contribute 25% via SEP, you can’t also do a separate 25% employer contribution to a solo 401(k). Generally, pick one or the other.

Frequently Asked Questions

Can I make Roth contributions to a solo 401(k)?

Yes. Most solo 401(k) plans allow you to designate your employee deferrals (up to $24,500 in 2026) as Roth contributions. The employer profit-sharing portion is always pre-tax, but your personal deferrals can be Roth.

What’s the maximum I can contribute to a solo 401(k) in 2026?

The overall limit is $72,000 (under 50), $80,000 (50-59 or 64+), or $83,250 (ages 60-63). This includes employee deferrals ($24,500-$35,750 depending on age) plus employer profit sharing (up to 25% of compensation).

Can I do a Mega Backdoor Roth with my solo 401(k)?

Only if your plan document allows after-tax contributions and in-plan Roth conversions. Most off-the-shelf solo 401(k)s from Fidelity, Schwab, and Vanguard don’t support this. You’d need a custom plan from a provider like MySolo401k.net.

Do I need employees to have a solo 401(k)?

No—that’s the point. Solo 401(k) is for self-employed individuals with no common-law employees (other than a spouse). If you have employees working 1,000+ hours/year, you’d need a standard small business 401(k) instead.

Can I roll my old IRA into my solo 401(k)?

Yes. This is actually a great strategy to clear pre-tax IRA money and avoid the pro-rata rule for backdoor Roth IRA contributions. Most solo 401(k)s accept rollovers from Traditional IRAs, SEP IRAs, and old 401(k)s.

What’s the deadline to set up a solo 401(k)?

You must establish the plan by December 31 of the year you want to make contributions. Employee deferrals must be made by December 31. Employer contributions can be made until your tax filing deadline, including extensions.

Can I have a solo 401(k) if I also have a W-2 job with a 401(k)?

Yes, but the employee deferral limit ($24,500) is per person across all plans. If you defer $15,000 at your W-2 job, you can only defer $9,500 at your solo 401(k). Employer contributions are calculated separately for each plan.

Is solo 401(k) better than SEP IRA?

Generally yes. Solo 401(k) allows both employee deferrals and employer contributions, offers a Roth option, and potentially allows loans. SEP IRA only has employer contributions (no deferrals, no Roth). The main advantage of SEP IRA is simpler setup and administration.

Get Started with Your Solo 401(k)

Ready to set up or optimize your solo 401(k)? Schedule a tax planning consultation and we’ll help you calculate maximum contributions, choose the right provider, and integrate with your overall tax strategy.

For S-Corp owners, see our S-Corp retirement and 401(k) planning guide. For a complete view of retirement strategies, visit the Retirement Tax Planning Hub.

Related Guides:

• Retirement Tax Planning Hub
• Backdoor Roth vs Mega Backdoor Roth
• Pro-Rata Rule Explained
• Roth 401(k) vs Traditional 401(k)
• S-Corp Retirement & 401(k) Planning