Solo 401(k) vs Roth IRA: Should You Do Both?

They are not the same bucket

This question gets asked a lot but it's a false either/or. The $7,000 Roth IRA cap (2026) is completely independent from the $23,500 Solo 401(k) deferral cap. Same person can do both in the same year, no overlap.

Roth IRA limits

$7,000 contribution cap, $1,000 catch-up at 50. Income phase-out begins at $150k single MAGI / $236k joint. Above the phase-out range, you use the backdoor Roth conversion technique (perfectly legal, slightly more steps).

Solo 401(k) Roth

$23,500 employee deferral can be 100% Roth. No income limits. Employer share can technically be Roth under SECURE 2.0 but provider support is rare in 2026.

The standard order

1) Max Roth IRA first ($7,000), forced Roth, dollar for dollar grows tax-free forever. 2) Solo 401(k) employee deferral up to $23,500, Roth or Traditional based on bracket. 3) Solo 401(k) employer profit sharing, Traditional pre-tax for the immediate deduction.

When this stack makes sense

$50k income: Roth IRA + maybe $5k Solo 401(k). $100k income: full Roth IRA + $23,500 Solo 401(k) employee deferral + $14k employer share. $200k income: full stack pushes near the $70,000 Solo 401(k) ceiling plus $7,000 Roth IRA = $77,000+ tucked away.

The Roth-vs-Traditional debate

For the Solo 401(k) employee deferral specifically, the rule of thumb: if you expect retirement income above today's 22% bracket, Roth wins. Below it, Traditional wins. Most freelancers in their peak earning years sit in the 22-24% bracket and the answer is genuinely close, splitting 50/50 is a defensible compromise.