Insurance on property owned by Solo 401k
I’m in escrow to buy rental property with my Solo 401k trust. How should I take the insurance? Answer: The property insurance should be obtained in the name of the Solo 401k trust (the owner of the property). Sometimes an insurance company may insist that the insurance be in your name as an individual. As […]
Can you open a Solo 401K when you’re 70 years old?
My parents are selling their business and retiring. They’re going to make some money on the sale and are worried about taxes. They have earned income for this year to date from the business, so I am wondering if they can contribute the max to a newly opened Solo 401K and at least get the […]
What happens if sponsoring company shuts down
What are the options for my Solo 401K plan if the company that sponsors the plan shuts down (I am no longer self-employed)? Answer: A 401k plan is an employer-sponsored plan, therefore in order to maintain your Qualified Retirement Plan, you must maintain a small business or some sort of self-employment activity in some legitimate […]
Using both spouse’s accounts under the same 401k
Both my wife and I have separate accounts under our Solo 401k. Can I use funds from my account together with my wife’s account to make the investment? Answer: You can pool funds together from different accounts under the same 401k into single investment. The key here is that all of the expenses of the […]
What is the six-year restatement period?
In the past the restatement cycles have been somewhat disorganized. The IRS has now created a systematic six-year cycle. Pre-approved plans must be restated every six years to incorporate the interim amendments and any discretionary amendments that have been adopted since the last restatement. At the end of this six-year period, there will be a […]
What is a pre-approved plan?
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 […]
What is a plan restatement?
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.
Why do I need to keep amending my plan?
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 […]
1099-INT reporting earned interest on Solo 401k bank account
I received Form 1099-INT interest earned statement from my bank (Wells Fargo). Does the interest earned need to be reported on my tax return? If yes, TurboTax will automatically apply taxes on it. Since the bank account is for a 401K, I believe income tax should not be applicable on it. Can you help? Answer: Assuming […]
My rollover was incorrectly reported as normal distribution on Form 1099-R
When I set up my Solo 401k, I contacted my custodian to request a direct rollover from my existing IRA into my Solo 401k. Now the custodian sent me Form 1099-R for the rollover. Is this correct? If it’s reported as a distribution, how do I correct it? Answer: When you request a rollover, the […]