The short answer is, yes.
By maintaining your Solo 401k funds in a standard checking account, you are most likely not earning interest. In contrast, an interest-bearing checking account provides the possibility of generating interest on your account balance. If you're not actively investing your Solo 401k funds and want a way to earn a bit more on your balance, an interest-bearing checking account may be a viable option. However, it's important to note certain considerations and keep them in mind.
Remember, the bank account where you may hold some of you 401k funds is not the fiduciary, nor are they the custodian of your funds. The bank account is simply that, a bank account where some of your funds may sit for a while as you are receiving rollover funds, depositing contributions, or even a landing place for when your 401k does investing.
Because the bank account doesn’t deal with the daily in’s and out’s of your 401k account, they will not know what is a rollover, a contribution and likewise don’t differentiate between an investment or a distribution.
As the 401k plan fiduciary, you are responsible for all the accounting and reporting for your Solo 401k.
If you have an interest-bearing checking account for your Solo 401k trust, the bank may issue a 1099-INT for the interest earned on any money sitting in the account during the year. And because the EIN for your 401k bank account is associated with your 401k trust, it's considered a QRP (Qualified Retirement Plan) and is tax-exempt. That means you don't have to list the 1099-INT funds on your personal tax return or file a separate return for your 401k trust. The IRS already knows that the EIN which received the 1099-INT, your 401k Trust, is assigned to a tax-deferred entity/account.
So, if you received a 1099-INT from the bank where your 401k trust account is held, just file that form with your plan documents for your records.
For further questions regarding tax reporting, always consult your CPA and/or tax preparer.