If you have a solo 401k, also known as a self-employed 401k or an individual 401k, your plan year typically is the same as the calendar year. When the plan’s assets as of December 31 last year exceeded $250k, you are required to file a Form 5500-EZ with the IRS before July 31 each year.
If you dread another tax form, relax. Form 5500-EZ is very easy to do. When my plan was with Fidelity, I received my Retirement Plan Annual Valuation Statement from Fidelity each year. With the information from Fidelity, I completed Form 5500-EZ in less than 10 minutes.
Besides the usual Tax ID, name, address, and phone number entries, Form 5500-EZ asks about the plan’s assets at the beginning of the year, at the end of the year, and the total contributions during the year. As far as the numbers go, that’s it, very simple. I got those numbers from the annual valuation statement from Fidelity.
Accounting
For money contributed in one year for the previous plan year, you can either count it in the year it was actually contributed (the “cash method”) or you can count it on the form for the previous year (the “accrual method”), but once you pick a method you should stay consistent with that method from year to year. To me, the cash method is easier because it matches the report from Fidelity.
Fidelity’s annual valuation statement doesn’t break out the total contributions by the employer and the employee(s) (“participants”) whereas Form 5500-EZ wants the employer and the employee/participant contributions separately. If you do a mix of employer and employee contributions, be sure to track the breakdown yourself. If you had an incoming rollover, enter the value of the rollover in the field for “Other.”
Plan Characteristics Codes
If you are filling out Form 5500-EZ for the first time, you have to look up a few codes in the Form 5500-EZ Instructions. The second time you just copy from the previous year. For my plan:
Line 2d Business code:
- 519100 = Other Information Services (including news syndicates, libraries, internet publishing & broadcasting)
Line 8 List of Plan Characteristics:
- 2E = Profit-sharing
- 2J = Section 401(k) feature
- 3B = Plan covering self-employed individuals
- 3D = Pre-approved pension plan – A master, prototype, or volume submitter plan that is the subject of a favorable opinion or advisory letter from the IRS.
Opinion Letter Serial Number and Date
The 5500-EZ form also asks for an IRS opinion letter serial number and date. You can find them near the end of the plan document from your provider.
- Charles Schwab: Individual 401(k) Basic Plan Document (page 35)
- E*Trade: Individual 401(k) Plan Documents (page 67)
- Fidelity: Defined Contribution Retirement Basic Plan Document No. 04 (page 25)
- Vanguard: Individual 401(k) Basic Plan Document (page 49)
July 31 Deadline
That’s it. Form 5500-EZ is really easy, but you have to remember to file it. The deadline is July 31 each year for most plans that use the calendar year as the plan year. If you forget, the late filing penalty is $250 per day up to $150,000! Set up multiple recurring reminders in your calendar to file the form.
You can file the form on paper by mail to the IRS or you can file the form electronically using the EFAST2 system. Filing it electronically gives you proof that you filed the form. Use Certified Mail and keep proof of mailing if you file on paper.
The biggest advantage of a Solo 401k is that it allows employee contributions in addition to employer contributions whereas the SEP IRA only allows employer contributions. This is more important if your self-employment income is under $200k or so. If you are not earning big bucks from self-employment, Solo 401k is the way to go. If you are earning big bucks from self-employment, Solo 401k still helps you with Backdoor Roth.
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bn says
The last paragraph of this article was the best. Do you have an article that compares SEP IRA’s to Solo 401(k)’s based on who can contribute, how much, fees to set up each plan, and best brokerage to use for each?
Harry Sit says
bn – No, but I can write one.
Harry Sit says
Before I write one, read this by CPA Mike Piper: SEP vs. SIMPLE vs. Solo 401(k). Solo 401k is usually the best. Use Vanguard if you don’t need to rollover an existing SEP-IRA into it. Use Fidelity if you do.
Shawanda @ You Have More Than You Think says
I’ll be glad when I have to worry about the 5500-EZ filing requirement.
BN says
Thanks for the link to Mike’s article. I read his blog regularly too but seemed to have missed that one.
Out of curiousity – how did you even know that Form 5500 was required?
Harry Sit says
BN – The solo 401k provider lists it as a task. Fidelity says this under “Maintain Your Fidelity Retirement Plan”:
“The Plan Administrator is responsible for:
… …
Filing annual tax report Form 5500 — this filing does not apply until your total plan assets exceed $250,000. For more information on tax reporting, read Form 5500 Filing Assistance or Form 5500 Frequently Asked Questions.”
Vanguard is more obscure about it. It only vaguely mentions “Requires filing with IRS” on its compare plans page.
Son Nguyen says
As for “Plan Characteristics”: how do you know which ones to list? I understand your selections for solo 401k and likely work for mine own filing but I was wondering what some other characteristics mean (eg: 2B, 2C, 3E)
Mike says
Part 1 A – box 4 is confusing. Do you have to file this if the plan is < 12 months old, which it would be in the first year of the plan? Or only when the balance exceeds $250K?
Harry Sit says
Mike – You have to file this whenever the end-of-year balance exceeded $250k. It could be the first year, the third year, or the last year. The boxes in Part I, line A are just additional information. If it’s the first time you ever file this for the plan, check box (1). If it happens to be a short year (first year and you didn’t make the plan effective Jan. 1, or the last year before termination), check box (4). If none apply, don’t check any boxes.
Kevin H says
I stopped trying to navigate IRS/DOL guidelines on my company’s retirement plans a few years ago and I am so glad that I did! I hired a professional to do it and I recommend the same for anyone else trying to run their own business and administer their own plan. The mistakes that you can make and the time wasted fixing them is not worth it. I found an administrator to be a great value and appreciate all of the help that they have provided my company over the past two years.
JBR says
Thanks very much, this post saved me a lot of time!
Robert F says
I REALLY appreciate your list of the applicable characteristic codes. Very helpful.
Naarendra Gosar says
I have a question, I have solo 401k/KEOGH paired plan Profit Sharing/Money Purchase plan with total assets at the end of last year 248K. I did not contribute last year as I have become employee of another corporation. I would like to file final 550-ez and roll over the money to regular IRA. Do I need to file one 5500-ez for both plan or separate 5500-ez for each?
Harry Sit says
I don’t know whether your paired plan is set up as one plan or two. Do you have separate plan numbers? You file a 5500-EZ for each plan number.
Kevin says
Very helpful info! If I have a solo 401k that has <$250,000 for my self-employed side job, I understand there is no need to file 5500ez.
If I also have a 401k for my work as an employee in my regular full-time job, does the value of this 401k also get added for meeting the $250,000 threshold? Or are they completely separate plans even though they are "401k's" and I just need to cross the $250,000 line with the solo 401k one to be required to file 5500ez?
Thanks!
Harry Sit says
They are separate.
Kevin says
Thank you! Good to know that it is the balance of the solo 401k only that matters.
Kenneth says
I have a solo 401k, but it has less than $250,000 so I have not filed a 5500EZ yet. I am ending my solo business and will be closing my solo 401k.
Since the 401k has less than the reporting threshold, my understanding is that I would still have to file the form this one time because it is the last year of the plan (when I close it and withdraw all the amount so it ends at $0).
Should I check in Part 1A of the form that it is both my first and final return filed for the plan (both boxes 1 and 3)? Technically I have not filed for it before, so it would be my first and last time, but wanted to check with you how to go about it. Appreciate your help!
Harry Sit says
See 5500-EZ Instructions.
“Check box A(1) if this is the first filing for this plan. Do not check this box if you have ever filed for this plan, even if it was a different form (for example, Form 5500).”
“Check box A(3) if all assets under the plan(s) (including insurance/annuity contracts) have been distributed to the participants and beneficiaries or distributed or transferred to another plan. The final plan year is the year in which distribution of all plan assets is completed.”
Kenneth says
Thanks – so would you check both boxes since it is the first time filing the form and also corresponds to when all the plan’s assets were distributed? Or just box A(3) for closing of the plan in the final year?
Harry Sit says
I would check both.
Bob Galvin says
Harry, I have had a single K for several years, which I ended Nov 2017 and rolled over to an existing IRA, the ending balance was less than 100k. The single K sent form 1099-R to the IRS and the IRA receiver sent form 5498 to the IRS. Do I still have to do a 5500 EZ “Final return filed for the plan”, which is part 1 box A3?
Thank You! Bob
Harry Sit says
Yes you do! That’s something often missed when plan assets never exceeded $250k.
Narendra Gosar says
Hi, I submitted FINAL form 5500-ez with form 140704 and $500 (balance was under 250K ) . IRS has sent letter saying “We received your payment with form 114704. Our records indicate fee was paid for 5500ez. No other action will be taken on these accounts”.
Do I assume now, that I can transfer these funds from profit sharing/money purchase accounts to my personal regular IRA/retirement accounts? and close old accounts.
Thanks for your help.
Harry Sit says
I don’t know the answer. Please work with whomever your plan is set up with to see what other steps are necessary to terminate the plan. Here’s some information from the IRS about terminating a 401(k) plan:
https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-termination
Andre says
I terminated a profit sharing plan (single participant but it included my brother and I as partners in the business) in 2018. Our termination letter stated that we were terminating it as of 12/31/2018 but we transferred the funds to IRAs in November. When filling out 5500 ez do I check off short plan year (since funds were moved before the end of the year) or not, AND on line 5b would the number of participants at the end of the plan year still be 2 or should it be 0 since the plan was terminated?
Thanks in advance, Andre
Harry Sit says
Sorry I don’t know the answers to your questions. The IRS instructions on plan termination say you should distribute assets from the plan after the termination date. If you had done that, the answers to those two questions would be very clear.
https://www.irs.gov/retirement-plans/terminating-a-retirement-plan
Andre says
Thanks Mr. Sit.
We followed the recommendation of Fidelity Retirement Services that suggested that often funds can be distributed out before the plan expiration date. Since that plan expiration date was strictly something I wrote in a letter to myself and my brother I suppose I could just write a new letter dating the termination to just before we transferred the funds out. In that case I guess I would also check off short plan year and participants at end of plan year would be 0? You seemed to say the answers would be clear in that case.
Harry Sit says
Before the assets were distributed, you still had two participants in the plan.
Andre says
Thank you Mr. Sit
James says
Great info, thanks! Does the number of plan participants on form 5500 automatically include my wife? I was not sure how 2 participants works if each retirement plan is made for a single person.
I set up my solo 401k plan with Fidelity for a side job I have. The plan is under my name only, and the EIN was obtained under my SSN. But my wife is listed as a primary beneficiary. Does that mean that the number of plan participants is 1 or 2?
I was not sure if there is a difference between putting 1 or 2 participants on the form, or if there are actual rules that determine the number of participants.
Harry Sit says
A beneficiary gets the account only after you die. A beneficiary is not a participant. A plan can have two participants when one spouse hires the other as an employee or when the two of them own the business together.
Ken says
Hi Harry,
Long time lurker and this year is the first year I have to file this form.
I have a SE 401K and only participant. I do both the employer and employee contribution to the max of 55K for 2018. Is this what I would be putting down in the form?
7a 36,500
7b 18,500
7c 0
I was looking at your example and confused by your numbers. This may be because your form was from 2011 and you had two participants.
Thank for any insight.
Harry Sit says
You have to decide whether you will use the cash method or the accrual method first. To me the cash method is easier. If you choose the cash method, you enter the amount you actually deposited into the account between Jan. 1, 2018 and Dec. 31, 2018. The amount you contributed for 2018 but actually deposited in 2019 will go on the form for 2019.
Rivercity says
When my husband established his business and opened a Schwab solo 401k several years back, I was (as a spouse) employed on the books for two years, during which we made employee and employer contributions to the solo 401k. I have not been on the books since, though I still have my 401k open at Schwab. Is this a problem? My understanding is I could keep it open.
Now we are moving providers to TD Ameritrade, but I am unsure what to do with my account — do we move both? Can I keep mine open?
And finally (sorry for all the questions!) — if his 401k and mine *together* exceed 250K, do we need to file 5500-ez, or is this per SSN? And btw, I am not listed as a co-owner of the business, though we file taxes jointly.
Thanks in advance — fantastic blog
Harry Sit says
You can keep it open but all accounts have to be together with the same provider. The 250k threshold is on total assets, not per SSN.
Doug Stecklein says
I have a solo 401(k) account that was set up in 2003 when my business was a sole-proprietorship. A few years later I switched our company plan to a Simple IRA since we hired employees and were no longer eligible for the solo 401(k). I neglected to formally close the plan and in 2017 the balance grew to over $250,000 and I am now delinquent on 2 years of filing form 5500ez.
My plan is to file for penalty relief for 2017 and 2018, and to also close the plan. Do you think this will this be sufficient action considering the plan should have been formally closed when we switched to a Simple IRA 10-15 years ago? The balance grew solely from investments; no contributions since switching plans.
Craig W. says
Looks like your form has 2 extra ‘plan characteristics’ codes that you didn’t mention:
2R – Participant-directed brokerage accounts provided as an investment option under the plan.
2T – Total or partial participant-directed account plan – Plan uses default investment account for participants who fail to direct assets in their account.
How does one know if their plan has these? I also have a Fidelity Solo 401(k) so I assume mine does, but how do I know for sure? 2T in particular I’m not sure about.
Harry Sit says
I used to include those two codes. I don’t any more. A case can be made either way, to include them or not to include them. Some larger plans offer a set of “core” investment options plus a self-directed brokerage account. The Fidelity solo 401k plan is only a self-directed brokerage account without a core investment menu. Some larger plans default to a series of target date funds. The Fidelity solo plan defaults to the self-directed brokerage account because that’s the only option.
Craig W. says
Just FYI, I talked to Fidelity and they pointed me to https://www.fidelity.com/retirement-ira/small-business/form-5500, which says for a Solo 401(k) the two-character plan characteristics should be 2E, 2J, 2R, and 3D (interesting that they don’t mention 3B – Plan covering self-employed individuals). I suspect it doesn’t make much difference though; not sure why the IRS even needs this level of detail.
David says
Great info, thanks!
We are a C-Corp company. Employee are all owners and from 2 families husband and wife. Can we file 5500-EZ form for our 401K ?
Thanks for your help.
Harry Sit says
From Form 5500-EZ instructions:
“A one-participant plan means a retirement plan (that is, a defined benefit pension plan or a defined contribution profit-sharing or money purchase pension plan), other than an Employee Stock Ownership Plan (ESOP), which:
1. Covers only you (or you and your spouse) and you (or you and your spouse) own the entire business (which may be incorporated or unincorporated), or
2. Covers only one or more partners (or partners and their spouses) in a business partnership, and
3. Does not provide benefits for anyone except you (or you and your spouse) or one or more partners (or partners and their spouses).”
A C-Corp owned by two families isn’t included. So no, you can’t file 5500-EZ for your C-Corp’s 401k plan.
https://www.irs.gov/pub/irs-pdf/i5500ez.pdf (pages 1-2, under “Who Must File Form 5500-EZ”)
David says
Harry, Thanks for your prompt reply.
If this C-Corp only has 4 employee (Owner, owner’s spouse, partner and partner’s spouse), can I just file 5500-EZ for its 401K plan ?
Harry Sit says
A C-Corp isn’t a partnership. The two couples see each other as partners in the business but they aren’t partners in the legal context. They aren’t covered in item 2 above.
David says
Harry, it took me a little time to clarify what is going on. It looks like we started with simple IRA many years ago. But in 2009, we changed to 401K retirement plan. Since then, we did not file any 5500 form. Now if we cannot file 5500-EZ form, we will need to file 5500-SF form.
In this case, do you think we will have penalty, because we did not file 5500-SF starting from 2009 ?
Thanks in advance.
Harry Sit says
If you didn’t file the forms when you should have, you will have a penalty. The good news is if you catch up on all past due forms in one shot, the penalty is capped to $1,500 per plan for all years under the Delinquent Filer Voluntary Compliance Program (DFVCP).
https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/dfvcp
Before you go down that route, call the IRS hotline 877-829-5500 and double-check whether you should file 5500-EZ or 5500-SF. Tell them about the C-Corp and owners and spouses. If you should’ve filed 5500-EZ, the IRS has a different late filer penalty relief program, which also caps the penalty at $1,500 per plan for all years. If you owe a penalty you want to pay it to the right program.
https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers
David says
Harry, I finally got the guidance from my 401K provider that our plan is “one participant non ERISA plan”. We have total value more than 250K at the end of 2019. Can we still file 5500-EZ form ? Thank you in advance. David
Harry Sit says
Please still call the IRS hotline and get an answer there.
Andre says
Mr. Sit,
I filed a final 5500 E-Z for a Profit Sharing Plan over a year ago. Does the Internal Revenue Service ever acknowledge receipt or acceptance of such? Thank you in advance. Andre
Harry Sit says
They don’t send a receipt. You can call the help line number in the 5500-EZ instructions (877-829-5500) to confirm they received your filing. You will need to give them your EIN and Plan Number.
SUE MICHAELS says
WHAT IF AN EMPLOYER HAS 2 PLANS. A CB AND A PS. DO YOU COMBINE BOTH PLANS ASSETS TO DETERMINE IF OVER THE 250,000 VALUE?
Harry Sit says
Yes, assuming the cash balance plan also covers only you (or you and your spouse). From the Form 5500-EZ Instructions, page 2:
“Example. If a plan meets all the requirements for filing Form 5500-EZ and its total assets (either alone or in combination with one or more one-participant plans maintained by the employer) exceed $250,000 at the end of the [previous] plan year, Form 5500-EZ must be filed for each of the employer’s one-participant plans including those with less than $250,000 in assets for the [previous] plan year.”
Rg says
I have the same situation as Doug Stecklein in the thread above. Can you please advice?
Harry Sit says
Sorry, you need professional help in that situation. Maybe post on BenefitsLink forums and see if someone there is willing to take your case.
https://benefitslink.com/boards/
michael w stipes says
Do you have an example of a completed 5500-ez final return?
K says
Has anyone started using the efast platform to file their 5500EZ instead of doing it the paper version?
My first filing was for the year 2019 and did it via paper version, but I have been unable to confirm whether they have received it or not. Have called the 5500 hot line multiple times but can’t get to a live person on the other end. Starting to feel like it may be better to file electronically as it is said the filing can then be tracked online for confirmation. Thoughts?
Thanks.
Harry Sit says
I have, for the same reason as you’re thinking. Using EFAST2 gives you the positive proof you have filed the form. The electronic form is just as easy to fill out as the paper form.
michael w stipes says
I’ve never experienced an issue with mailing a paper filing. Have not tried electronically. Does any one have an example of a final filing??
K says
thanks, Harry.
BRIAN says
Harry, my wife and I are trying to figure this out:
12/31/20: Solo 401k = 249,383
Early 2021: made 120.5k of contributions for 2020
If we use “cash” accounting do we not have to file a 5500EZ until July 2022?
Or does the “2020 Plan Year” in 6a include contributions in 2021 for 2020?
Thank You for any insight you can give…
Harry Sit says
Apply Pascal’s Wager. If you file the form when you’re not required to do so, it only takes 10 minutes of your time. If you don’t file the form when it’s required, you face a large penalty. The penalty has increased from $25 a day to $250 a day. When in doubt, file the form. Use your best judgment in accounting for plan assets and keep it consistent from year to year.
BRIAN says
Didn’t realize we could file before we hit 250k.
Thanks, Harry!
David Lin says
Harry, I mailed 3 times 5500-EZ annual return in June 2020, December 2020 and April 2021 for my 2019 Filing to “Department of the Treasury
IRS, Ogden, UT 84201-0020”. I called 877-829-5500 each time to follow up with IRS each time. They still did not receive my 2019 Filing. IRS staff suggests me to fax my 2019 5500-EZ 2019 annual return to “Fax: 877-792-2864 and Attn: EP Account”. I already tried to fax for the past 2 days and always get the busy signal. Do you know if this fax number is right one to fax ?
Thanks for your help. David
Harry Sit says
Sorry, I don’t know. That number appears in the list of fax numbers in this IRS manual.
https://www.irs.gov/irm/part21/irm_21-003-008#idm140399621816368
David Lin says
Harry, Thanks for your help. David
Rob says
Such great information!
My question concerns older SEP and Simple IRA plans that my wife and I contributed to when running our same business, before setting up the solo 401k’s. Now I have hit the 401k threshold to file 5500EZ.
The SEP and simple IRAs are still sitting there without any contributions the last few years. Do they count as another one participant defined contribution plan? I’m guessing the SEP and Simple plans do not ever require form 5500EZ. Am I correct?
Harry Sit says
SEP and Simple IRA don’t count here.
Harold M says
If I make a 401K contribution for tax year 2021 in July 2022 (I filed an extension for 2021) do I include this contribution in my 5500-EZ form for Tax Year 2021, or my 5500-EZ for 2022?
Harry Sit says
If this is the first year you’re doing it, you can do it either way, but once you choose a method you have to be consistent in future years.
Bill G says
I am confused about the proper entries for lines 1b (Three digit plan number) and 1c (date plan first became effective) after restatement of a plan.
If the initial plan number was 001, is it supposed to be 002 after the plan restatement?
Does the plan effective date (1b) change after the restatement?
Harry Sit says
A restatement doesn’t change the plan number or the effective date.
Bill G says
Thank you so much for your prompt answer!
Steve says
Hi Harry, Great comments. Thanks for your advice on which codes to use (i.e. 2E, 2J, 3B, and 3D… and maybe 2R). I have a question about plan numbers, as I am trying to file my first 5500EZ. My plan was established in 2010. Fidelity had me fill out an amendment to it in 2015 to keep it current. I filled out amendment paper work and kept the plan number “001”. But should it have changed to 002? It’s not a new plan, but it is amended to stay up to date. I’m guessing you’ve had to amend your plan to keep it up to date if you’re with Fidelity also. Does the plan number change when you amend it, or is it ok to keep it the same like I did? Thanks! Steve
Harry Sit says
The plan number should stay the same when the plan is amended.
Steve says
Harry, You are awesome! Thanks for the quick reply! Steve
Steve says
Hi Harry, One more question if you know. Towards the end of my business I wasn’t making enough to pay myself via payroll. My understanding is that when I was paying myself payroll (whether or not I was able to contribute) then that year I was ACTIVE, but the last few years that I wasn’t paying myself I would be INACTIVE. Does that make sense? Don’t know if you ever faced the same challenge or not of lean years. Thanks!
Harry Sit says
If you’re referring to the number of participants and the number of active participants, I would count myself as an active participant regardless of whether I was paid via payroll. Inactive participants typically refer to terminated or retired employees who kept money in the plan.
John says
Thank you for the great info. I have an old solo 401k with a value under the $250k limit required to file 5500-EZ. I also have a separate standard 401k with my employer, so does the value of this 401k get factored in whether I need to file the 5500-EZ? I assume that the $250k threshold for 5500-EZ applies only to the solo 401k value, but wanted to confirm.
And if I leave my employer, I may consider doing a rollover of my 401k to my solo 401k to consolidate everything and avoid fees. Let’s say that with the rollover, the value of the solo 401k then exceeds $250k, then I would need to file 5500-EZ? I was not sure if it makes a difference if the threshold was reached due to a rollover and not from actual contributions. Thanks again!
Harry Sit says
Only the solo 401k. It doesn’t matter how the assets come into the solo 401k.
John says
Thank you for the prompt response. I had two follow-up questions please:
I understand that when the solo 401k value exceeds $250k at the end of the year then I would need to file 5500-EZ. But then let’s say the following year the value goes below $250k due to market conditions, so would I skip filing 5500-EZ for that lower year (even if I filed the previous year)?
If I do a rollover from my 401k to my solo 401k, but say the $250k threshold is reached in a subsequent year due to the value of the investments going up but there are otherwise no contributions or rollovers. It seems in Form 5500-EZ, the financial section would list $0 for contributions (employers, participants) and $0 for others (including rollovers), since the threshold value was reached just from investment growth that year. Is that correct? I just wanted to make sure there is no potential red flag in having no contributions in a year but suddenly reaching the filing threshold.
Thanks again!
Harry Sit says
You may find this post helpful: Use Pascal’s Wager When You’re Not Sure About Tax Rules. Once you start filing, I would suggest keep filing. It helps you maintain a good cadence. Otherwise it’s easy to forget. Use Google Calendar to Manage Bills, Taxes, and Investing Tasks.
You report the activities truthfully. If the plan didn’t have any activity that year, it just didn’t. The sponsoring employer/business should still continue to exist though. A plan can’t continue when the employer sponsor goes away.
John says
Thanks for the great info! I saw the latest Form 5500ez has a question 12, “If the plan sponsor is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, enter the date of the Opinion Letter and the Opinion Letter serial number.” Since you listed code 3D (plan that is the subject of a favorable opinion or advisory letter from the IRS) as a plan characteristic, what letter date and number should be inputted in Form 5500ez for a Fidelity solo 401k plan?
Harry Sit says
You can find them on page 28 of Fidelity’s Defined Contribution Retirement Basic Plan Document No. 04.
Craig says
Is a Self-Employed/Solo 401(k) a Profit Sharing Plan (page 25) or a Money Purchase Pension Plan (page 28)? Pretty sure it’s not the latter, but not totally sure it’s the former either.
Harry Sit says
It’s a Profit Sharing Plan.
Sheila says
Thanks for the info!
Vanguard on their 5500 paperwork they send me every year lists my current tax year employer contributions for 2023 as 40,000. On the same page it lists my employer contributions for the previous tax year as 2000 (contributed in 2023 prior to tax deadline for 2022).
Using the cash basis method for employer contributions do I just list the 40,000 as the current TAX YEAR contribution or am I supposed to list 42000 – so listing ALL cash contributions received during 2023 (regardless of what tax year it is meant for)?
In addition if one is using the accrual method then I assume one lists the 40,000 I had contributed in 2023 plus what one contributed in 2024 for the 2023 tax year. In my case since I maxed out contributions the participant would be 30,000 and the employer would be 43500 for a max contribution of 73500 for over 50.
Correct? The accrual method matches my tax return for 2023 but the cash method matches Vanguard paperwork I am sent.
HarolD M says
I have an Individual 401K (Solo 401K) with Schwab that is over $250,000 and a ROTH 401K with E-Trade that is around $30,000 (Solo 401K account as well) Do I have to complete a separate Form 5500-EZ for the Roth 401K or do I just aggregate the numbers and report them on one form?
Harry Sit says
A solo 401k isn’t just a bigger IRA. You’re not supposed to have two solo 401k plans at two different places. Please consult an experienced professional to resolve it.