Terminating the Solo 401k
How do I terminate my Solo 401k plan? Terminating your Solo 401k plan includes the following steps: Distribute all assets of your Solo 401k plan Distributions may be taxable or non-taxable, depending on the type of distribution taken. Formally request to terminate your Solo 401k plan You must submit a request to us in writing […]
Correcting a prohibited transaction
Under Internal Revenue Code a penalty tax is assessed equal to 15 percent of the amount involved in the prohibited transaction. After the prohibited transaction has been identified, it must be corrected immediately – certainly within the taxable year. However, if the prohibited transaction is not corrected during the taxable year, then an additional penalty […]
Direct vs. indirect rollover
I am trying to rollover from my existing IRA to my Solo 401k. The IRA custodian is saying that this can be processed as an indirect rollover, which is allowed once a year. Is this the correct way to proceed? A rollover can be processed as an indirect rollover or a direct rollover. Indirect rollovers […]
Charitable donation from my 401k
Is it possible to make a charitable donation from my 401k to a church or another non-profit without tax-consequences? Answer: If you plan to include retirement assets in a charitable donation, you should consider how it may affect your finances. In some cases, it can be more beneficial to designate the charity of your choice […]
Filing a 1099 for a contractor working on a property owned by my 401k
Do I need to get a tax ID from a contractor working on a property in my 401k so that I can file and submit 1099 to the IRS? Answer: According to the IRS if you pay independent contractors, you have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your […]
What happens when my spouse stops working for my business?
Answer: If you and your spouse work in your business together and your spouse stops working in the business, (s)he can still participate in the plan in terms of directing their existing assets in the plan. Your spouse has all the rights of the participant except the ability to make contributions into the plan. Your […]
Performing a Roth conversion
IMPORTANT: Please speak with your CPA prior to performing a Roth conversion in order to understand the tax consequences. This is a taxable event. For more information on Roth conversions, review our Knowledge Base articles. If you would like to perform a Roth conversion, please do the following: From a banking standpoint, the Roth account is […]
Can my wife transfer her 401k from a former employer to my Solo 401k plan?
Answer: No, she cannot rollover her retirement funds into your account. All retirement accounts are individual and tied to a Social Security Number, so she would not be able to rollover her IRA or 401k into your individual account. (The only exception would be upon death). However, your wife can participate in your Solo 401k if she […]
Withholding 20% Tax on Distribution
I would like to take a distribution from my Solo 401k plan. How do I withhold and report the taxes to the IRS? As the plan administrator, it is your responsibility to withhold the taxes and report the distribution. You will need to do the following: 1. Withhold the taxes and remit them using the […]
Plan year different than employer fiscal year
Can the plan year be different than the employer fiscal year? Answer: Yes, the plan year can be different from the fiscal year, but you must then pay careful attention to the deadline for making contributions. The deadline for depositing employee salary deferrals into the plan is relatively straightforward. However, the same cannot be said for […]