In this YouTube segment, Mark Kohler advises a client, Connie, on how to choose between a Solo 401(k) and a Traditional IRA for retirement savings. He explains that the optimal choice depends on how much she can contribute and whether she prioritizes immediate tax deductions or Roth tax‑free growth. Kohler outlines several strategies: using a traditional Solo 401(k) for a larger deduction, pairing it with a backdoor Roth conversion; opting for a traditional IRA for a modest deduction while still executing a backdoor Roth; and making a non‑deductible 401(k) contribution (up to $19,500) and converting it in‑plan to a Roth. He emphasizes that Connie cannot claim both a traditional 401(k) and a traditional IRA deduction simultaneously, but she can combine a traditional contribution with a Roth conversion. Finally, he recommends a follow‑up consultation with Darren to review her income, family situation, and contribution goals to tailor the best plan.
Chapters
Connie, what's better is both. It depends on what you're able to contribute, what type of write off you want. Are you focused more on Roth IRAs or more on the deduction? So let me give you all guys a few ideas. Connie, we want to go to left side, right side. Here's operations, here's assets. Every time I talk with a client, we build a diagram and I want to make sure everything makes sense visually. So on the operations side, I don't know what's going on, but I presume she has a business of some sort and we call business B.S. that's her acronym for that, Sorry. And she's going to say, well, should I fund a 401k? Because you have to have a business to do that. And you can have a 401k at work, 401k in your business. Absolutely. Or should I do an IRA? Now, there's a big question mark here, everybody. If Connie needs the write off, we're going to focus on a traditional contribution to the 401k and a traditional Iraq. Now, she's not going to be able to do both, but why I said I like both is because she can do the traditional 401k and get a bigger write off and do a Roth on the side. It's called the backdoor Roth. So she can do both a backdoor Roth and a traditional. If she wants to put away more, get the write off. Or if she goes, nah, I don't, I just need a five, six thousand dollars write off. Okay, let's do the traditional IRA and get the write off, but do a backdoor Roth with that. So you could do a backdoor Roth or a backdoor in a traditional IRA. Another option is you could do a non deductible 401 contribution, which is 19,500, and convert it to Roth inside the 401k and still do a traditional and get a deduction. So there are all sorts of variations. Connie, what we would, this is where you'd get on phone call with Darren in the next two to three weeks at our office if you were to so choose, you know, if you chose to do so. And Darin would help you decide on the 401k or the traditional, the back door and answer all these questions. And we're going to look at your income and your family situation and how much you want to put away and how much you can afford to put away. And, and that's going to play out. So that's the, that's the answer. Connie. I wouldn't say one is it's going to depend on how much you want to put away and in what way. And so I don't think it's a better or an there's a lot.
