What is my plan number?
If you had us set up a brand new plan for you, the plan number will always be 001. If you had us amend and restate your existing plan, it may be a number other than 001. Please refer to page 1 of your plan Adoption Agreement to verify your three digit plan number.
The bank sent me a Form W9 to fill out for my Solo 401k Trust. How do I fill it out?
Fill out form as follows:
Can the plan year be different than the employer fiscal year?
Yes, the plan year can be different from the fiscal year, but you must then pay careful attention to the deadline for making contributions.
The deadline for depositing employee salary deferrals into the plan is relatively straightforward. However, the same cannot be said for the profit sharing contributions.
For profit sharing contributions, there are different rules depending on the purpose of the deadline. In other words, one set of regulations may specify one deadline for compliance purposes, but another set requires a different deadline for deduction purposes.
In order to deduct a contribution for a given year, it must be deposited by the due date (including extensions) of the company tax return.
For example, ABC Company is a calendar year tax filer. Its 2015 company return is due March 15, 2016, but can be extended to September 15th. If ABC Company does not extend the due date of its company return, it must deposit its contributions to the plan no later than March 15, 2016, in order to claim the deduction on its 2015 return. If ABC does extend, the deposit must be made no later than September 15th.
The Annual Additions limit refers to the total amount of contributions that can be allocated to a participant's account for a given limitation year. In most cases, the limitation year is the same as the plan year. In order for a company contribution to be treated as an annual addition for a given year, that contribution must be deposited no later than 30 days following the due date of the company tax return (with extensions).
For example, the ABC Company extends the deadline for the 2015 company tax return to September 15, 2016. The date by which they would need to deposit the profit sharing contribution in order for it to be treated as a 2015 annual addition is October 15, 2016, which is 30 days after the September 15th tax-filing deadline.
While doing my taxes this year, my accountant realized that my Solo 401k trust has the same EIN as my business. After reviewing the paperwork you originally sent me, I realize that I made an error when I setup my Vanguard account. I gave them my business EIN instead of the trust EIN. Can I rectify this by just giving Vanguard the trust EIN?
Contact Vanguard and explain that you originally provided them with the incorrect EIN and ask to correct it. Provide them with the copy of the letter from the IRS reflecting the correct number. Make sure as well that the account name is correct by comparing it with your plan documents.
A pre-approved plan is one that the IRS has reviewed and approved all of the options that are available. The IRS issues an advisory or opinion letter as evidence of the plan's pre-approved status.
All employers who adopt a pre-approved plan covered by the IRS letter are entitled to rely on the approval letter issued at the “global” level without applying for their own, individual determination letter.
Our plan documents include the IRS letter. It is typically sent as a link in the email which accompanies the plan documents.
A restatement is a complete re-writing of the plan document. It incorporates changes from any plan amendments that may have been adopted since the last time the document was re-written.
Qualified plans are governed by a set of Federal laws enacted by Congress and regulated by various agencies. The IRS is responsible for oversight of the tax aspects of retirement plans, and the DOL is responsible for reporting, disclosure and fiduciary aspects of retirement plans. The result is a continual change in the laws due to changing legislation and regulations issued to oversee compliance with the laws. As a result, there are frequent changes in the law but in most cases they are not major ones. A requirement to have a qualified retirement plan is that it must be in writing. This means that as the laws change, your plan must generally be amended to reflect the changes.
Is the 401k Trust revocable or irrevocable?
Revocable and irrevocable trust are terms that are usually applied to a personal trust – one that an individual would set up for estate planning purposes. Those terms are not applied to a qualified plan’s trust, such as the one that is established for a 401(k) plan or a profit sharing plan.
A qualified plan’s trust is similar to an irrevocable trust in that once contributions go into a qualified plan trust, those monies must remain in the trust until distributed to participants, or, for a defined benefit plan, sometimes upon plan termination, if there are surplus assets.
A qualified plan’s trust is similar to a revocable trust, though, in that the plan sponsor (sponsoring employer) and/or the document sponsor may amend the terms of the trust document. Participants (those who would be considered the beneficiaries of the trust) do not consent to the changes to the terms of the trust document.
How do I prove my Solo 401k is a qualified plan?
Answer:
The absolute best proof that your plan is a qualified plan in the eyes of the IRS is the IRS determination (or IRS opinion) letter that we supplied with your Solo 401(k) plan. The letter is from the IRS and shows that the 401k meets the IRS guidelines for a qualified plan.
The plan’s qualified status is what allows you to receive your tax benefits including:
How should I sign and date my Solo 401k plan documents?
Answer:
When you receive your Solo 401k plan documents, you will need to sign several documents on the signature line. Unless requested otherwise, you will need to sign for the following roles:
You may notice the plan effective date may be January 1 of the current tax year. This is to take maximum advantage of the benefits during this tax period and to keep your plan year to match the calendar year.
When inserting the date for your signatures, you should enter the Adoption date as specified in the plan documents. Keep in mind that these documents should be signed prior to opening bank accounts, initiating transfers, or initiating any transactions for your Solo 401k trust.