A lot of self-employed folks and solopreneurs ask: “If I’m still building my business and cash is tight, should I bother with a Roth Solo 401(k)?” Totally fair question. When you’re in growth mode, every dollar counts. And retirement might not be at the top of your list.

But here’s the thing: setting up a Roth Solo 401(k) early on can actually give you a major edge, both tax-wise and flexibility-wise, even if you’re not maxing it out right away.

Why It’s Worth Considering Early

When you’re in growth mode, your income is probably lower than it’ll be in 5 or 10 years. That means you’re in a lower tax bracket, making Roth contributions now (where you pay taxes up front) a smarter long-term move. You’re locking in low-tax dollars today for tax-free growth tomorrow.

Plus, Solo 401(k)s, especially the Roth version, come with some real perks:

• Higher contribution limits than IRAs
• No income limits for Roth contributions
• Ability to take loans from your account (up to $50K or 50% of your balance)
• Access to self-directed investing, if you go with the right provider

The IRS has the full breakdown of contribution limits and rules here.

Don’t Let “Maxing Out” Scare You Off

I hear it all the time: “I’m not ready to contribute $20,000+.” Good news: you don’t have to. Even a few thousand a year makes a difference when it’s growing tax-free. The bigger win is just setting the account up early. That way, it’s there when your income spikes or when you sell a big project and want to shelter a chunk of it.

Setting up a Roth Solo 401(k) also gives you optionality. You can contribute pre-tax, Roth, or both (depending on how you structure it). That kind of tax flexibility is gold later on.

Here’s how the Roth Solo 401(k) compares to SEP IRAs and Traditional 401(k)s, if you’re still weighing your options.

What Growth-Stage Entrepreneurs Should Think About

If you’re still scaling, here’s how to decide if this move makes sense right now:

✅ Do you have at least a little margin for contributions, even a few grand?
✅ Do you want access to Roth benefits and higher limits in the future?
✅ Would you like the option to borrow from your plan later (just in case)?
✅ Are you already self-employed with no full-time employees?

If that’s a yes across the board, setting one up now might be a smart strategic move. You don’t need to go all in. Just get the structure in place.

Final Word

If your business is still in its scrappy years, it’s easy to put off retirement stuff. But the Roth Solo 401(k) is one of the rare tools that grows with you, whether you’re bootstrapping or scaling fast.

Get it in place early, contribute what you can, and you’ll thank yourself later when you’re sitting on a solid tax-free retirement stash. You don’t need to be “there” yet. You just need to start.

We include a ROTH component in all our Solo 401(k) Plans. For more information, email [email protected] or call 1-800-482-2760.