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
Distributing funds out of the Solo 401k is called an “in-service distribution” when the Solo 401k plan and its adopting business are still active. The distributed funds can be rolled over into another retirement account. Most clients do not want to roll funds out of the Solo 401k because of its checkbook control and ability […]
Employees and your Solo 401k
Can I have part-time or full-time employees in my business, if I have a Solo 401k? What if I want to hire employees in the future? Your Solo 401k is an owner-only plan. It is designed for the owner of a business who does not have full-time or certain part-time employees, other than the owner […]
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 […]
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 […]