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Form 5500 EZ and Your Solo 401k

Or who needs to file an end of year tax form for their Solo 401k

Solo 401k plans offer several significant benefits, one being that gains grow tax-free.

Because of this, filing federal and state income tax for Solo 401k plan gains is not required. In fact, a Solo 401k typically does not have any standard annual filing requirements at all.

However, there is one exception: if you have more than $250,000 in assets within a Solo 401k plan as of December 31st of the previous year you are required to file form 5500 EZ.

This includes both liquid cash and non-cash assets such as:

  • Real estate
  • Gold or other precious metal coins and bullion
  • Private company investments
  • Notes
  • Stocks

If a Solo 401k you own has less than $250,000 in plan assets before December 31st of the previous year, you are not required to file form 5500 EZ. The only exception being if the Solo 401k plan was terminated that year as form 5500 EZ is required to be filed on the final year of a one-participant plan.

What is form 5500 EZ?

IRS form 5500 EZ is a simple form used for the purpose of reporting filing information for one-participant retirement plans, which includes Solo 401k accounts, and is due by July 31st of each tax year.

Who can see what I file on form 5500 EZ?

Years ago it was possible for the public to see your form 5500 filing on the IRS website. Obviously, in some cases this could create privacy or other issues for 401k plan holders.

However, as of 2012, the form 5500 information is no longer public for Solo 401k plans, per the IRS.  

What happens if I don’t file form 5500 EZ?

If you own a Solo 401k with $250,000 or more of plan assets in a particular year and do not file form 5500 EZ, you risk being hit with hefty penalties amounting to up to $15,000 at a rate of $25 per day.

How to file form 5500 EZ

Form 5500-EZ must be filed and sent directly to the IRS at the address listed below:

Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0020

You can read here for instructions on how to fill out form 5500 EZ, including form download instructions. 

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