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Solo 401k Reporting Requirements

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Our Solo 401k has 100% IRS approval and each 401k plan comes with an IRS Opinion Letter proving the Qualified Status of your retirement plan.  Our team works with the IRS and Dept of Labor on an ongoing basis to ensure our documents are up to date, and the most compliant while simultaneously providing the greatest flexibility in the industry for self-directed investors. 

Lawmakers and regulators from various branches of government regularly reach out to Nabers Group Founder and CEO, Jeff Nabers, for his thoughts on the state of the self-directed investing industry. Mr. Nabers has attended President’s Dinners and private Federal Reserve Meetings because of his instrumental trailblazing in the self-directed retirement plan marketplace.

No Tax Return

Because the Solo 401k is an IRS-approved retirement plan, there is no tax return. The assets in a Solo 401k can grow tax-deferred (when using traditional 401k funds) or tax-free (with Roth 401k funds).

This is a great advantage to the self-directed investor because any profits on investments inside the Solo 401k plan are not subject to capital gains taxes. 

Form 5500-EZ

Once the Solo 401k has $250,000 or greater in plan assets, a single form is filed for the plan. This form is IRS form 5500-EZ.

Form 5500-EZ is the filing requirement for Solo 401k plans with $250,000 or more in plan assets. It is simply an informational return that is filed with the IRS. Solo 401k plans with assets totaling less than $250,000 have no filing requirement at all.

It’s important to distinguish between form 5500-EZ and form 5500. Form 5500 is reported to take 10+ hours to prepare and is notoriously complex and riddled with bureaucratic hurdles.

Often, an independent audit of the company is required upon filing form 5500. Penalties for not filing form 5500 on time include:

  • The IRS penalty for late filing of a 5500-series return is $25 per day, up to a maximum of $15,000.
  • The DOL penalty for late filing can run up to $1,100 per day (as indexed for inflation), with no maximum.

From 5500 does not apply to the Solo 401k plan by Nabers Group.

Instead, the only reporting requirement is form 5500-EZ.

With the help of our guides and training videos, most CPAs and accountholders estimate form 5500-EZ takes about 20 minutes to complete.

How to Determine Your Plan Asset Value

Add up the total plan assets for all participants (generally you and your spouse) to determine if the total balance is $250,000 or more.

If you have tangible assets (e.g. real estate, cryptocurrency, metals, etc) in the plan in addition to cash, you must tally the asset valuein addition to cash to see if you meet the $250k threshold.

If you have taken a participant loan from your Solo 401k, that amount is considered a plan asset. Therefore, you must still count the loan amount in your total plan value (even if the loan isn’t paid back yet). 

If after calculating the total asset value of your plan, including all assets, cash, and any outstanding loan balances – the cumulative value is less than $250,000 – no reporting is required.

When is Form 5500-EZ Due?

The 5500-EZ must only be filed if the previous calendar year had more than $250,000 in total assets in your Solo 401k plan. The 5500-EZ must then be filed by July 31st of the following calendar year.

For example, if on December 31st, 2018 your Solo 401k plan had more than $250,000 in total assets, then you would need to file your form 5500-EZ by no later than July 31st, 2019.

Where Do I File Form 5500-EZ?

There is no electronic filing for form 5500-EZ. It must be mailed in:

Department of the Treasury
 Ogden, UT 84201-0020

Note: Please check before mailing in your 5500-EZ to confirm the correct address. 

You must file a 5500-EZ if you are terminating your plan

If you’re rolling the assets over to another 401k provider you shouldn’t need to file a 5500-EZ if you are keeping the same trust and tax ID number. However, it is recommended you check with your new document provider. 

If you’re closing the 401k completely and distributing the assets, or rolling everything into a self-directed IRA or other qualified retirement vehicle, then you must file and submit form 5500-EZ.

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