Deadline to deposit employee contributions
The employee/elective deferral contribution should be deposited into the Solo 401k within 7 business days of processing. If the employee contribution is made within that time frame, it is still counted as timely under the Department of Labor’s safe harbor rule for employee contributions. If the 7-business day deadline is not met, the employee contribution may […]
Automatic enrollment in the Solo 401k
The Automatic Enrollment feature can be added to your Solo 401k plan, allowing you to receive a $1500 tax credit over 3 years. What it is 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, […]
Late 5500-EZ filing
What if I filed Form 5500-EZ late? Although the IRS has increased the penalties for late filing of Form 5500-EZ, they also offer two options for penalty relief. Form 5500-EZ is an annual informational form for the Solo 401k, filed with the IRS: If you are filing Form 5500-EZ after the deadline, the IRS has […]
Your role as Solo 401k fiduciary
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 […]
Mega backdoor Roth within the Solo 401k
What it is The mega backdoor Roth strategy is a way to get more Roth funds into your retirement account. Roth funds are taxed initially but grow tax-free. The mega backdoor Roth strategy consists of: The Mega Backdoor Roth strategy offers an alternative to contributing to a Roth IRA directly, which is limited to $7,000 […]
Important deadlines
As year-end is approaching, please note the following important upcoming deadlines: Contributions Deadline: Plan owners must formally elect to make contributions before December 31st. Depending on your business type, you may also be required to make employee elective deferral contributions before December 31st. We’ve put together a summary for you that answers common questions about contributions. […]
After-tax contributions
The Solo 401k allows you to contribute to your plan in two ways- as employee and employer. Within the category of employee contribution, there are three types: Defining the three types of employee contributions What are the differences between them? There are two main differences between these three types of employee contributions- how the distribution […]
Reporting CARES Act distributions and repayments
The IRS has released Form 8915-E and 8915-F for the reporting of CARES Act distribution(s) that were taken in 2020, their repayment, or their inclusion in income. If you took a CARES Act distribution in 2020, note which form(s) would apply to you: Form 8915-E is used to report: If you took a CARES Act […]
Can I contribute more than my business has in revenue?
Can I contribute more than my business has in revenue? Answer: No. All your contributions (whether pre-tax or Roth) must come from your business earnings.
Calculating plan assets
I’m getting ready to file Form 5500-EZ and need help calculating the plan assets of my 401k. I used some of the funds for a down payment to purchase an investment property. The rest of the purchase price was financed using a hard money loan. My wife doesn’t have any investments at this time, just […]