DISCLAIMER: Please note that this is not and should not be considered a replacement for tax, legal or investment advice. Always consult your tax advisor, CPA and/or general counsel before filing.
Download the handy step-by-step guide for suggestions and guidelines on how to fill out the 5500-EZ reporting form on your Solo 401k plan.
You must file form 5500-EZ if you have $250,000 or more in total plan assets. This includes the total amount of assets. If you only have $50,000 cash, and you have a property worth $200,000 – your total plan assets are $250,000 and you must file a 5500-EZ.
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This article is meant to assist your CPA in successfully completing the contribution section of form 5500-EZ. This article is not a replacement for tax, legal or investment advice and it is strongly recommended you engage qualified professionals to assist you in any tax related matters.
5500-EZ Employer Contributions:
There is no employer match contributions with the Solo 401k. Employer profit-sharing contributions are based on a percentage of earned income of the business above and beyond the employee elective deferral limit. Employer profit-sharing contributions are pre-tax (tax deductible) .
Participant Contributions:
Participant contributions are also known as employee elective deferrals These can be pre-tax (tax deductible) or after-tax (Roth).
Total Contribution Limits:
As of 2021, Employee + Employer contributions cannot exceed:
$58,000 per participant / per year if under age 50
$64,500 per participant / per year if age 50 or over
Contribution limits have nothing to do with rollover money or how much money your Solo 401k investments are making and are directly related to how much you are earning in your business.
Other Contributions:
This is where you’ll document the funds you are rolling into the plan. You only need to specifically document the amount you’re rolling over in the year the rollover is completed.
Example: $220,000 is rolled into the plan in 2021 when Solo401k.com sets up the Solo 401k. $220,000 is listed on line 7c for the 2021 5500-EZ. In 2021 – you won’t need to list the rollover that was done in 2021.
Rollovers don’t count toward contribution limits though they do count toward total plan assets. If you roll in $250,000 or your rollovers push the total plan assets over $250,000 then you must file a 5500-EZ.
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.