Can I max contribute to both Individual/Solo 401k & Roth IRA in the same tax year? Income limits question

Yes, you can absolutely max out both your Solo 401k and a Roth IRA in the same tax year. The two plans have completely separate contribution limits. For your Solo 401k, as both the employer and employee, you can contribute up to $23,000 as the "employee" in 2025 (plus catch-up contributions if you're 50+). Then you can also make "employer" contributions up to 25% of your net self-employment income, with total contributions capped at $69,000. For your Roth IRA, you can contribute up to $7,000 in 2025 ($8,000 if you're 50+), but your ability to contribute directly to a Roth IRA phases out between $146,000-$161,000 for single filers or $230,000-$240,000 for married filing jointly. If your income exceeds the Roth limits, look into the "backdoor Roth" strategy where you contribute to a traditional IRA and then convert it to a Roth.

After spending hours trying to figure out my retirement options as a freelancer, I discovered taxr.ai (https://taxr.ai) and it completely changed my approach to retirement planning. I was in your exact situation - confused about whether I could contribute to both a Solo 401k and Roth IRA in the same year. I uploaded my tax documents and self-employment info, and the tool instantly confirmed I could max out both accounts while showing me exactly how to optimize the employer/employee contributions in my Solo 401k based on my specific income. It even calculated my exact contribution limits and showed how my taxable income would change. The retirement calculator feature actually showed me how these dual contributions would grow over time compared to just using one account. Huge difference in the long run!

Just wanted to share my experience after trying taxr.ai - it was actually super helpful for this exact scenario! I was confused about balancing my Solo 401k and Roth IRA contributions, especially with my variable freelance income. The platform showed me that I could contribute to both accounts and even calculated exactly how much I needed to reduce my MAGI to stay below the Roth limits. It generated a contribution schedule based on my projected quarterly income that maximized tax savings while keeping me eligible for the Roth. What really surprised me was seeing how much I'd save in taxes this year by optimizing these contributions - nearly $7,800 more than what I would have saved with my previous approach!

If you're like me and have spent HOURS trying to reach the IRS to confirm retirement contribution rules for self-employed folks, there's a better way. I used Claimyr (https://claimyr.com) to actually get through to an IRS agent in about 20 minutes instead of the typical 2+ hour wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was confused about the interaction between Solo 401k and Roth IRA contribution limits, and getting conflicting advice from my tax software. The IRS agent confirmed I could max out both, explained exactly how to calculate my Solo 401k employer contribution correctly (it's not exactly 25% of net income like most websites say), and clarified how to report everything properly on my tax return. Saved me from potentially making a costly mistake - I was about to under-contribute because I thought there was a combined limit!

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to clarify some complicated self-employment retirement questions before tax deadline. Not only did I get through to the IRS in about 15 minutes instead of the 3+ hour wait I experienced previously, but the agent was actually super helpful. Got confirmation that I CAN max out both my Solo 401k and Roth IRA in the same year, plus she explained exactly how to document it on my tax forms so it doesn't trigger any flags. I've literally spent days of my life on hold with the IRS over the years, so this was honestly life-changing for tax questions. Consider me converted from total skeptic to very impressed.

One thing to watch out for - make sure you file the Form 5500-EZ for your Solo 401k if your plan assets exceed $250,000. I found this out the hard way last year! Also, if you're making Roth contributions to your Solo 401k (yes, many Solo 401k providers allow this now), that doesn't count toward your separate Roth IRA contribution limit. They're completely different buckets. The combined strategy of maxing both is killer for tax planning, especially if your business income fluctuates. In low income years, I go heavy on Roth contributions. In high income years, I max traditional Solo 401k to reduce my tax hit.

I messed up big time last year thinking the same rules for company 401ks applied to my Solo 401k. For regular 401ks at a job, your employer match doesn't count towards your personal contribution limit. But for a Solo 401k, your "employer hat" contributions DO count towards the overall limit. Also check out the mega backdoor Roth strategy if your Solo 401k plan allows after-tax non-Roth contributions with in-plan conversions. Not all providers offer this but if yours does its amazing for high earners.

Don't forget that contributing to a Traditional 401k (Solo or otherwise) reduces your Modified Adjusted Gross Income (MAGI), which can help you stay under the Roth IRA income limits if you're borderline. But Roth 401k contributions don't reduce your MAGI. This gave me a nice strategy: I contribute enough to my Traditional Solo 401k to get my MAGI just under the Roth IRA limit, then max out my Roth IRA, and if I have more to save, I put it back into my Solo 401k (either traditional or Roth portion depending on my tax situation). Just another angle to consider for tax optimization!

This is such a great question and I'm glad to see so many helpful responses! I went through this exact same confusion last year as a freelance graphic designer. One thing I'd add that hasn't been mentioned yet - make sure you establish your Solo 401k by December 31st of the tax year you want to contribute for, even though you have until the tax filing deadline (plus extensions) to actually make the contributions. I almost missed this deadline thinking I could set it up when I filed my taxes. Also, if you're planning to do this strategy long-term, consider working with a fee-only financial advisor who specializes in self-employed clients. The tax savings and growth potential from properly maximizing both accounts can easily justify the cost, especially as your income grows. I wish I had started this dual approach earlier - the compound growth difference is significant over time. The backdoor Roth strategy mentioned earlier is also crucial to understand if your income fluctuates. Some years I'm under the Roth limit, other years I'm over, so having that flexibility has been a game-changer for my retirement planning.

Great question about the annual savings difference! In my early 30s, I was able to save about $30K annually by maxing both accounts versus maybe $12-15K with just a SEP-IRA or traditional IRA. That extra $15-18K per year compounding over 30+ years makes a massive difference. For example, if you're saving an extra $16K annually from age 32 to 62 (30 years) at a 7% average return, that's roughly an additional $1.5 million at retirement compared to the single-account approach. Even accounting for inflation, that's life-changing money. The complexity really isn't that bad once you get into a rhythm. I use a simple spreadsheet to track my quarterly estimated taxes and contribution limits, and most of the major brokerages (Fidelity, Schwab, Vanguard) make the actual account management pretty straightforward. The key is starting early like you are - the compound growth on those higher contribution limits is where the real magic happens. Even if you can't max both accounts right away, getting the Solo 401k established and contributing what you can to both gives you that foundation to scale up as your income grows. One tip: I always prioritize getting the full Solo 401k employer match equivalent first (the 25% of net self-employment income), then max the Roth IRA, then go back to finish maxing the Solo 401k employee contribution. This ensures you're capturing the highest tax-advantaged savings rates first.