Defining compensation
Your Solo 401k contributions are based on your compensation from the adopting business of your Solo 401k. Your compensation determines the amount you can contribute. Since your Solo 401k contributions are based on your compensation, it’s important to define compensation correctly. So what is compensation? Compensation is active, not passive, income Active income is earned from […]
Your role as Solo 401k plan administrator
As plan administrator, you are responsible for administering the plan according to the plan documents and in compliance with the IRS. Your responsibilities as plan administrator include: Keeping records of all plan activities Recordkeeping is one of the main responsibilities of the plan administrator. You will need records of all contributions, distributions, investments, etc. The […]
Mandatory Roth catch-up contributions
Starting in 2026, all catch-up contributions made to the Solo 401k by a higher-paid employee must be made as a Roth. This is per the IRS’s recently released final regulations for the SECURE Act 2.0, Section 603. What are catch-up contributions? In 2025, the catch-up contribution limit was $7,500 In 2025, the super catch-up contribution […]
Super catch-up contributions
The SECURE Act 2.0 introduced a new limit to catch-up contributions to your Solo 401k, if you are age 60-63. These are referred to as “super catch-up contributions.” In 2025, the catch-up contribution limit was $7,500 In 2025, the super catch-up contribution limit was $11,250. In 2026, the super catch-up contribution limits remains at $11,250. […]
Employer Roth contributions
Employer/profit sharing contributions can now be made as Roth, under the provisions of the SECURE Act 2.0. Previously, employer/profit sharing contributions could only be made as pre-tax. If you wanted the funds as Roth, you would need to make the pre-tax employer contribution to the Solo 401k and then convert the funds to Roth within […]
Possible extensions for 5500-EZ filing
You may be able to obtain a possible extension for filing Form 5500-EZ, but extensions must be obtained before the filing due date. If an extension is obtained, you would mark the appropriate box on Form 5500-EZ, Part I, B. The due date of Form 5500-EZ filing is: Possible extensions to file Form 5500-EZ include: […]
Liability protection for the 401k
What protection is available for a Solo 401k and its assets? A Solo 401k and its assets can be protected through: Federal protection in the case of bankruptcy The Bankruptcy Code, Section 522, gives federal protection in the case of bankruptcy. This means that if a 401k participant declares bankruptcy, their 401k assets will be […]
Rolling funds out of the Solo 401k
Rolling funds out of the Solo 401k is called an “in-service distribution” when the Solo 401k plan and its adopting business are still active. Most clients do not want to roll funds out of the Solo 401k because of its checkbook control and ability to invest in a wide range of investments. However, there may […]
Part-time employees and your Solo 401k
If you have part-time employee(s) that meet the following criteria, you will be ineligible for your Solo 401k per the SECURE Act: The above criteria does not apply to: However, if you have part-time employee(s) in your businesses that meet the above criteria, they will become eligible for the plan in 2024 or 2025. And this renders you […]
Deadlines and extensions to establish and contribute
When is the deadline to establish a Solo 401k and make contributions to it? And is the deadline affected if I have an extension on my tax filing? It depends on the tax status of the adopting business of the plan. Note, however, that if you have an extension for your tax filing deadline, this […]