If your adopting business address changes, this should be updated:
Email your address change to clients@sensefinancial.com. We will update your address in our system.
To update the address with the IRS for the 401k EIN, complete one of the methods in their instructions:
The Automatic Enrollment feature can be added to your Solo 401k plan, allowing you to receive a $1500 tax credit over 3 years.
The Automatic Enrollment feature allows employers to contribute a default portion (e.g. 3%) of an employee’s wages to the retirement plan, on the employee’s behalf.
With the Solo 401k, you are typically both the employer and the employee. You may also have a spouse as an additional employee. By adding the automatic enrollment feature, you are setting a default contribution to be made for each employee in the plan.
With this feature, the IRS allows you, as the employer, to claim a $1500 tax credit over 3 years- a $500 dollar-for-dollar tax reduction per year if you maintain the arrangement over 3 years.
With Automatic Enrollment, the employer must make at least a 3% salary deferral contribution for each employee. This is typically done as a pre-tax employee contribution.
However, the employee can elect to do otherwise by completing an election form within a certain time frame. The employee can elect to:
To make this election, the employee must complete the Deferral Election form. This form is located in our Miscellaneous Forms section:
The completed Deferral Election form is submitted to the plan administrator. Typically, this is you- you are the employee, employer, and the plan administrator.
The employee must complete the Deferral Election Form and then typically, also keep the form as plan administrator. This form must be completed within 60 days of receiving the notice.
Note that the limits for the employee salary deferral contribution still apply to this arrangement:
The Automatic Enrollment feature must be for the full plan year. It has two requirements:
Your first notice is included in your set of plan documents (“Automatic Enrollment Notice”). Please review the notice carefully.
The $1500 tax credit is given over 3 years at $500 per year. You must maintain the Automatic Enrollment feature for all 3 years to claim the tax credit. The tax credit is a dollar-for-dollar reduction (vs. a deductible expense).
To claim the credit, you must file Form 8881 for the first year Automatic Enrollment was included in your plan:
https://www.irs.gov/pub/irs-pdf/f8881.pdf
https://www.irs.gov/forms-pubs/about-form-8881
See the section for Part II. Small Employer Auto-Enrollment Credit
You are responsible for this filing. Please make sure to file this in a timely manner.
You are responsible for the administration of this arrangement. It is important that you are aware of your responsibilities under this arrangement.
You must actually make the employee contribution(s) as stated in your arrangement. Or if doing otherwise, you must complete and keep the Deferral Election form to document the change.
https://www.irs.gov/pub/irs-tege/auto_enroll_fact_sheet.pdf
https://www.irs.gov/retirement-plans/faqs-auto-enrollment-what-is-an-automatic-contribution-arrangement-in-a-retirement-plan
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-automatic-enrollment
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/automatic-enrollment-401k-plans-for-small-businesses.pdf
Did you know that you are the fiduciary of your Solo 401k?
In addition to being a participant in the plan, administering the plan as plan administrator, directing the plan as trustee, you are also the fiduciary.
This means that you are responsible for doing the following, as noted by the US Department of Labor (DOL):
With the benefits of your Solo 401k comes responsibilities. To equip yourself for your fiduciary responsibilities, do the following:
Review the set of plan documents that was sent to you by Sense Financial.
The Defined Contribution Adoption Agreement is the central document of your set. Take a few minutes to read through it.
The Summary Plan Description takes the selections from the Defined Contribution Adoption Agreement and spells them out in plain language, in a question and answer format.
The client portal is your go-to resource, available at all times.
The Knowledge Base is a great section to read, look up topics via search, and learn. Our videos are also available in the Education section of the client portal.
Most importantly, our compliance emails. We regularly send out announcements, reminders, and updates related to keeping your plan in compliance.
List quoted from the US Department of Labor (DOL) resource below:
What is my plan number?
The bank sent me a Form W9 to fill out for my Solo 401k trust. How do I fill it out?
*The name of your Solo 401k trust and its EIN are listed on the IRS EIN letter. This was included in your original set of plan documents.
Note that the EIN for the Solo 401k is different from the EIN of your adopting business.
Can the Solo 401k plan year be different than the employer fiscal year?
Yes, but note the following:
The deadline for depositing employee salary deferrals into the plan is relatively straightforward.
For employer profit sharing contributions, there are different rules depending on the purpose of the deadline. 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 15th, 2016, or September 15th with extension. Without extension, ABC Company must deposit its contributions to the plan by March 15th, 2016, in order to claim the deduction on its 2015 return. With extension, ABC Company can deposit by September 15th.
Deadlines and extensions to establish and contribute
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 extension).
For our given example, the ABC Company files the extension for their 2015 company tax return to September 15th, 2016. They would need to deposit the profit sharing contribution by October 15th, 2016, which is 30 days after the September 15th, in order for it to be treated as a 2015 annual addition.
The IRS requires the following for your Solo 401k:
These amendment and restatements are issued by the IRS to reflect changes and updates in the laws which govern qualified plans, including your Solo 401k.
When the IRS releases an amendment or restatement, you are required to adopt them in order for your Solo 401k to remain compliant.
This must be done by the IRS-defined deadline. Restatements, for example, must be adopted within a two-year window after the IRS releases the restatement.
The amendment or restatement process is as follows:
By signing and keeping the plan documents, you will have completed the required amendment or restatement for your Solo 401k.
Your Solo 401k is a qualified retirement plan trust. As a qualified retirement plan trust, it is not the same as a personal trust, e.g. one that is set up by an individual for estate planning.
The 401k has features of both revocable and irrevocable trusts:
When completing a form for your 401k where one option must be chosen, you can mark revocable as the trust type.
Sense Financial Services is a document sponsor for your Solo 401k.
Required plan amendments and restatements
All qualified plans require IRS-approved documents.
To maintain qualified status of your 401k, you must have and retain the services of a document sponsor, such as Sense Financial, who has IRS-approved plan documents. Without an active document sponsor, your 401k would not longer have its qualified status.
Is there a way to make my living trust the primary beneficiary of my Solo 401k?
Yes. On the beneficiary designation form, you can name your living trust as the primary beneficiary.