How to Maximize Roth Savings Through a Solo 401(k)
Contributor Natalie Choate examines how some self-employed workers can make the most of Roth savings later in life.
We’re continuing our theme from last month: how certain people can acquire Roth accounts at a low tax cost. In June, we looked at how salaried employees can take advantage of “designated Roth” options within their employers’ 401(k) plans. This month, we present a Roth idea for the not-quite-retired older worker who earns freelance income.
Self-Employed Individual With No Employees
Tammie, age 66, is a “retired” accountant who still does a bit of accounting and tax return work for some longtime clients. She reports the income from this business on Schedule C of her Form 1040 income tax return. She has no employees; she does it all herself. Her income from this work is about $30,000 per year net of all expenses including the deduction for self-employment tax.