If you have a solo 401(k) plan, in many situations, you’ll have to file form 5500-EZ. But there are a variety of exemptions. Let’s walk through them.
If you have eligible participants that are not technically “classified as owners, then you are not required to file a form 5500 unless your assets are greater than $250,000.
As a result, most people with a solo 401(k) plan do not have to file for 5500. But even if your assets are below $250,000, you will still have to file for 5500 if you terminate your plan and roll out all the assets in a final year.
In this situation, you must file a 5500 and notify the IRS that it is your first and final tax return for this plan.
Once your assets are rolled out into another plan, like an IRA or ASAP, you will not have to file a 5500 at that point.
Realize that many people with employees will have a requirement to file form 5500 SF. This form is more complex than form 5500 EZ, but it is much easier to file than the complete form 5500.
Timely Filing to Avoid Penalties
It is critical to submit your Form 5500-EZ report on time to avoid the penalties that can occur when the form is late. A missed deadline can result in penalties that can amount to as much as $4,000 for large plans and $1,500 for small plans. If you miss the deadline, you’ll need to file through the DOL’s Delinquent Filer Voluntary Compliance program (DFVC) in order to avoid penalties. In most cases, you can avoid penalties by filing on time.
Before submitting your Form 5500-EZ, you should make sure to check the deadline before you mail it. You can find more information about the form’s deadline on the IRS website. The form must be completed in blue or black ink, and you must sign it by hand. You can obtain an official printed paper version of the form from the IRS. The Form 5500-EZ should be completed by hand with black or blue ink and signed before it is mailed.
To submit your Form 5500-EZ on time, you must have your plan up to date. In some cases, your Solo 401k plan had less than $250,000 in assets at the end of the previous year. You can still make contributions on the Form 5500-EZ by following the instructions that the IRS provides on its website. You should include the total liabilities of your plan, excluding future distributions made to participants. This can increase the amount of your Form 5500-EZ and your contribution limit.
How to Complete the Form
If you’re in the process of preparing your IRS Form 5500-EZ, you may be wondering how to fill it out. You’re not alone. Millions of taxpayers are filing the same tax form every year, but how do you make sure you’re filling out yours correctly? Luckily, the IRS has an excellent help guide to guide you through the process. Here are some ways to prepare your tax form for filing:
The first thing you should do is find the correct form for your situation. For example, if you’re self-employed, your Form 5500-EZ should be very easy to complete. This form includes a section for you to fill out that explains how to fill in your information. The final section includes information about your employer. You can use a help guide to complete questions 1a through c. You must also make sure you check the Late Filer Relief Program box. You won’t need to fill out the Form 5500-EZ for 2020 unless your plan is retroactively adopted.
When completing your Form 5500-EZ, you should make sure that you’ve compiled all of your financial information in one place. This includes employer contributions, employee deferrals, and rollovers. Make sure your brokerage provides all of this information. You should also include the assets and liabilities of your plan and any loans. You should also provide the tax codes for your employer and your employees. Fortunately, Form 5500-EZ help guides can save you a lot of time and trouble.