 TITLE: What Is a Solo 401(k)? CONTENT: What Are the Tax Benefits of a Solo 401(k)?\n-------------------------------------------\nA one-participant 401(k) has a number of tax advantages that make it an attractive retirement savings plan for self-employed workers.\n*   **Your contributions are tax-deductible.** As previously mentioned, the money you put into a solo 401(k) as an employee will reduce your tax liability during your pre-retirement years. That money also enjoys tax-deferred growth. There are some tax benefits on the employer side as well. Profit-sharing contributions count as a deductible business expense for businesses that are incorporated. If not, they'll likely count as a personal income deduction.\n*   **You can opt for a Roth solo 401(k).** Traditional 401(k)s are funded with pretax dollars; not so with Roth 401(k)s. These types of retirement accounts are funded with contributions that have already been taxed. While you'll miss out on the tax deduction today, you can enjoy tax-free distributions in retirement. END