Step 11 | Retirement Strategies

Why a Roth Solo 401(k)?

A Roth Solo 401(k) is ideal for self-employed individuals or small business owners who want to:

Contribute higher limits than a traditional IRA
Benefit from tax-free growth and withdrawals in retirement
Invest in a wide range of assets including real estate, stocks, and startups
Maintain full control of your retirement funds

Steps to Set Up Your Roth Solo 401(k)

Confirm Eligibility: Must have self-employment income or own a small business with no full-time employees (other than spouse).
Choose a Provider: Look for self-directed options with checkbook control for diverse investments.
Complete Plan Documents: Set up the 401(k) plan agreement and adoption agreement.
Open a Business Bank Account: Required for plan contributions and investments.
Fund Your Account: Contribute up to the annual IRS limits for Roth 401(k).
Start Investing: Purchase assets according to your investment strategy, keeping records for compliance.

The 10-year Treasury note is a U.S. government bond with a fixed interest rate paid every six months. Holding Treasurys in a Solo 401(k) is advantageous because:

Interest grows tax-deferred in a traditional Solo 401(k).
Interest grows tax-free in a Roth Solo 401(k).
You avoid state and local taxes on Treasury interest.

To ensure your investment exceeds annual service fees, you can calculate the minimum investment needed using this formula:

Minimum Investment = Service Fee ÷ Expected Yield

Interactive Minimum Investment Calculator

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Tip: Consider consulting a tax professional before making contributions to ensure compliance with IRS rules and to maximize tax advantages.