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Fidelity’s new small business plan offers a Roth IRA within a 401(k)

The company said it offers more tax certainty in retirement

Updated:

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.
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Photo by Christin Hume on Unsplash

Key Insights

  • A new Roth option for the self-employed: Fidelity Investments has introduced a Roth version of its Self-Employed 401(k), giving solo business owners a new way to save for retirement with after-tax dollars.
  • Greater tax certainty in retirement: The new plan allows eligible savers to lock in today’s tax rates and potentially enjoy tax-free withdrawals later, a feature that can be especially appealing as retirement nears.
  • Timely with changing tax rules: The launch comes as federal rules under the SECURE 2.0 Act push more high earners toward Roth-style savings for future catch-up contributions.

For Americans approaching retirement who run their own businesses, planning can be more complicated than it is for traditional employees. Without access to an employer-sponsored 401(k) or pension, self-employed workers must shoulder the full responsibility for building their retirement nest egg.

Fidelity Investments says its newly launched Roth Self-Employed 401(k) is designed to help close that gap. The new option allows self-employed individuals — or small business owners with no employees other than a spouse — to make after-tax, salary-deferred contributions to a Roth account within their existing Self-Employed 401(k) plan.

Roth account within their existing Self-Employed 401(k) plan

That distinction matters, particularly for people in their peak earning years. With a Roth account, contributions are taxed upfront, but qualified withdrawals in retirement are generally tax-free. For someone nearing retirement, that can offer clearer expectations about how much money will actually be available to spend.

“Self-employed individuals face unique challenges when planning for retirement since they are not able to leverage more traditional workplace savings options,” said Roger Morrisette, vice president of small business retirement products at Fidelity. “A Roth option within the 401(k) can offer greater clarity around how much savings will be available in retirement since that portion has already been taxed.”

The timing is also notable. Under the SECURE 2.0 Act, starting in 2026, certain high earners with W-2 income above $145,000 will be required to make catch-up contributions only to Roth accounts. Fidelity says growing awareness of these rule changes — combined with the long-term tax efficiency of Roth savings — is driving increased interest among retirement savers.

Fidelity has offered its traditional Self-Employed 401(k) since 2003, allowing business owners to combine employee deferrals with employer contributions to maximize savings. The new Roth Self-Employed 401(k) expands that lineup and joins other small-business retirement options from Fidelity, including SEP IRAs, SIMPLE IRAs, and its pooled employer plan, Fidelity Advantage 401(k).

For people nearing retirement, the message is clear: even without a traditional employer, there are increasingly flexible tools to fine-tune tax strategies and retirement income. Adding a Roth component may help reduce future tax uncertainty — a priority for many Americans preparing to transition from earning a paycheck to living off their savings.