Both Solo 401k and Self-Directed IRAs offer investors the ability to invest in a wide spectrum of assets, including stocks, bonds, mutual funds, ETFs, Real Estate Investment Trusts (REITs), private placements, and more. However, with a Solo 401k, you can also invest in physical precious metals like gold or silver coins or bars. This is not an option with a Self-Directed IRA. Additionally, while both accounts allow for loans against the balance of the account up to certain limits set by law, only the Solo 401k allows for Roth contributions which are taxed differently than traditional contributions.

When it comes to taxes, there are some differences between these two retirement accounts that investors should be aware of before making their decision. With a Solo 401k, all earnings within the account grow tax-deferred until withdrawal at retirement age when they become taxable income; however, this is not true for Roth contributions made into either type of account as those will be taxed upfront, but withdrawals from them, later on, will be tax-free upon reaching retirement age. On the other hand, with a traditional Self-Directed IRA, any gains realized within the account are subject to taxation each year regardless if withdrawn or not. In contrast, with a Solo 401k, no taxes need to be paid until the money is taken out at retirement age.

The fees associated with both types of accounts vary depending on what type of investments you choose and who your custodian/administrator is, but generally speaking, they tend to be similar across providers. It is critical to shop around and compare costs before deciding which one works best for you financially. Generally speaking, most administrators charge an annual fee plus additional charges per transaction, so make sure you understand exactly what fees may apply before investing your hard-earned money into either type of account.

A solo 401k allows for higher contribution limits than a traditional IRA or Roth IRA, with up to $57,000 per year (or $63,500 if you’re over 50). Additionally, contributions are tax-deductible, and earnings grow tax-deferred until retirement age. The money can also be used to purchase physical gold or silver coins without any additional taxes or penalties.

With a self-directed retirement account, investors have more flexibility when it comes to investment choices, as they can invest in alternative assets such as real estate or private businesses in addition to precious metals. Furthermore, the annual contribution limit is slightly higher at $6,000 ($7,000 if you’re over 50).

One downside of both types of accounts is that they require custodians who charge fees for setting up and managing the account which can add up quickly depending on how often transactions occur. Additionally, both accounts come with early withdrawal penalties if money is taken out prior to retirement age unless certain conditions are met, such as disability or death. Lastly, neither option offers protection from inflation since the value of gold and silver tends to fluctuate significantly over time.