ThomasM125
Expert Alumni

Retirement tax questions

What the sentence means ""Unlike individual 401(k) plans, Roth 401(k) plans are for businesses that have employees" is that the individual 401(k) plan is just for individuals, while the Roth 401(k) plan can be used by an individual and also a business that has employees.

 

It may have been better worded as ""Unlike an individual 401(k) plan, the Roth 401(k) plan can be used by a sole proprietor and also a business that has employees."

 

So, a sole-proprietor can set up a Roth 401(k).

 

 

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