Study Shows Self-Employed Individuals Would Be Better Prepared for Retirement With a Roth Solo 401(k) Plan

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With IRA Financial Group’s Roth Solo 401(k) Plan, a minimal annual Roth 401(k) contribution can leave a retiree with over $695,000 in tax-free retirement funds upon retirement

Roth Solo 401K Plan

If Mitt Romney had been able to use a Roth Solo 401(k) Plan to make his investments, he would be in a far more tax advantageous position with respect to his IRA investments as he is currently

IRA Financial Group, the leading provider of Solo 401(k) Plans, commissioned a study to illustrate the enormous tax and retirement benefits of adopting a Solo 401K Plan with a Roth after-tax component. The study was designed to illustrate how a self-employed individual in the mid- forties can have over $695,000 in a tax-free Solo 401(k) retirement plan at the age of retirement by just making a small annual Roth 401(k) contribution of $10,000 to the plan. The study assumed a modest 5% annual rate of return on the investment. “The beauty of the Roth Solo 401(k) Plan, is that a self-employed individual can make Roth 401(k) contributions of up to $22,500 annually and then live off the account once they turn 59/1/2,” states Adam Bergman, a tax attorney with the IRA Financial Group. “In fact, If Mitt Romney has been able to use a Roth Solo 401(k) Plan to make his investments, he would be in a far more tax advantageous position with respect to his IRA investments as he is currently,” stated Mr. Bergman.

The Roth Solo 401K Plan is the ultimate tax-free retirement solution for the self-employed. With federal and state income tax rates expected to increase in the future, gaining the ability to generate tax-free returns from a retirement investment when one retire is the last surviving legal tax shelter. With a Roth Solo 401K, one can make almost any investment tax-free, including real estate, tax liens, precious metals, currencies, options, and private business investments and once one reaches the age of 59/1/2, he or she will be able to live off the income or assets of the Roth 401K without ever paying tax.

Unlike a Roth IRA, which limits an individual Roth IRA contributions to $5,000 annually ($6,000 if the individual is 50 years or older), in 2012, with a Roth Solo 401(k) account, an individual can make Roth (after-tax) contributions of up to $17,000, or $22,500 for those 50 or older by the end of the year -- allowing individuals to stock away thousands of dollars more in tax-free retirement income than they would through a Roth IRA.

With a Roth Solo 401K Plan, a self-employed individual or small business owner will have the ability to live tax-free of his or her retirement assets upon retirement. For a self-employed individual in their forties, by making just a small after-tax Roth 401(k) contribution each year, the individual would have a significant amount of tax-free assets to live off upon retirement. With tax rates expected to increase in the future, the ability to live tax-free off ones retirement funds will help one enjoy their golden years with significantly less financial stress.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.

To learn more about the IRA Financial Group and the Roth individual 401K Plan, please visit our website at or call 800-472-0646.

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Jaclyn Baily
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