The Trump Tax Cuts and Jobs Act creates a Required Minimum Distribution income tax vignette for 2026, making the Roth Only 401k a better contribution option now than ever before.

Under the old tax rates, it made sense to use traditional pre-tax deductible 401(k) Only contributions. But with the new tax rates, the pretax decision needs to be reexamined. Roth contributions, while not initially deductible, grow tax-free and can be much more beneficial in your later years.

TCJA lowered personal marginal tax rates that will go up again in 2026. This means getting money in a Solo 401k Roth now can turn into a big boost to your wealth later.

With the potential to return to higher tax rates in 2026 and beyond, adding accounts like Roth Only 401k requires a second look. WHY? Starting at age 70½, a formula designed by the IRS tells you the minimum amount you should start withdrawing from retirement accounts as taxable income. This additional income on your tax return:

1. often pushes your income into the next higher tax bracket,
2. can make more of your Social Security taxable, and also,
3. can lead to higher Medicare Part B premiums.

RMDs can create a tax bomb for 2026. Add higher rates when that bomb hits in 2026, and poof! Your net earnings in retirement can take a big hit on your income tax.

Using the lower tax rates from 2018, you will have a tax rate advantage when rates rise again in 2026.

consider this: Under the lower tax rules, before age 70, you convert a portion of your pre-tax Solo 401k to a Roth Solo 401k, and only pay taxes at the 10% and 12% rates. Starting in 2026, after you turn 70½, without this strategy, you would be subject to tax rates at the higher marginal rates of 25% and 28%. By using the Roth conversion strategy, you pay taxes at 12 cents on the dollar today, instead of 25 to 28 cents or more on the dollar later. That’s one tax rate advantage you don’t want to miss out on.

As for income limitations, if your 2018 adjusted gross income is less than $275,000, you can make an annual Roth 401k Only contribution of $18,500 if you’re under 50 or $24,500 if you’re 50 or older. If you have a spouse working with you who has earned income, your spouse can also make a Roth 401k Only contribution. With a smart review, there is usually a way to put money into a Solo Roth 401k.

Those who are a few years away from retirement aren’t the only ones who should take another look at Solo 401k Roth. Astute planning means finding ways to put money into a Roth Solo 401k to help build your savings. With new tax laws, a little calculation now can mean thousands of tax savings later.

Do you have questions?