Please note, the most recent IRS updates about IRS Form 5500-EZ will be found at the top of this article.

Beginning January 1, 2024, the IRS is now requiring people to enter the date and serial number of the prototype document sponsor’s IRS favorable determination letter. This is number 12 on this year’s form (see instructions below).

Beginning January 1, 2021, a one-participant plan or a foreign plan required to file an annual return can file Form 5500-EZ electronically using the Department of Labor’s EFAST2 filing system, or file Form 5500-EZ on paper with the IRS. Form 5500-SF can no longer be used by a one-participant plan or a foreign plan filer in place of Form 5500-EZ. Information for a one-participant plan or a foreign plan filed electronically with EFAST2 filing system will not be available to the public on DOL’s website.

A one-participant plan or a foreign plan must file Form 5500-EZ electronically through the EFAST2 filing system, if the plan sponsor is subject to IRS e-filing requirements pursuant to Treas. Reg. 301.6058-2.

In general, the Solo 401(k) plan is easy to operate. There is generally no annual filing requirement unless the fair market value of your Solo 401(k) plan asset exceeds $250,000, as of December 31 of the previous year. If your Solo 401(k) plan assets exceed $250,000 as of 12/31 of the previous year, you will need to file a short information return with the IRS (Form 5500-EZ). In such a case, the Solo 401(k) plan participant will need to file a short information return with the IRS (IRS Form 5500-EZ). The IRS Form 5500-EZ is due on July 31.

How to report the fair market value of assets held by your Solo 401(k) plan to the IRS

The Internal Revenue Service (“IRS”) Form 5500-EZ is an annual information return that is required to be filed by every “One-Participant Plan” (owners and their spouses), also known as a Solo 401(k) Plan, with plan asset value in excess of $250,000 as of December 31 of the previous tax year. The purpose of filing and reporting the fair market value (“FMV”) of your solo 401(k) plan’s assets is to inform the IRS of assets over $250,000.00 annually held in a Solo 401(k) Plan. You must file the Form 5500-EZ if a plan meets the requirements alone or combined with any other qualified retirement plan owned greater than 80% by the business owner or a related party (one controlled group) exceeding $250,000.00.

You do not have to file the IRS form 5500-EZ for a plan year for a one-participant plan if the total of the plan’s assets and the assets of all other one-participant plans maintained by the employer at the end of the plan year does not exceed $250,000.00, unless the current year is the final plan year of the plan.

IRS Form 5500-EZ Filing tips

1. The IRS Form 5500-EZ is due every July 31st of the next plan year. If the filing date falls on a Saturday, Sunday, or legal holiday it may be filed on the next day that is not.

2. Starting in January 2021, you do not need to file it as hard copy. You can now e-file the 5500-EZ online. If you wish to submit a hard copy, you can send it directly to the IRS at the following address:

Department of the Treasury

Internal Revenue Service

Ogden, UT 84201-0020

3. To file the IRS Form 5500-EZ using a private delivery service, you must use the approved IRS Designated providers (PDS) as follows: DHL Express (DHL): Same Day Service. Federal Express (FedEx): Priority Overnight, Standard Overnight, FedEx 2 Day, FedEx International Priority and FedEx International First. United Parcel Service (UPS): UPS Next Day Air, UPS Net Day Air Saver, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

4. Private delivery services should use the following address:

Internal Revenue Service

1973 Rulon White Blvd.

Ogden, UT 84404

5. The IRS Form 5500-EZ can now be e-filed electronically!

6. The Plan Administrator or employer (owner) must use the official printed paper Form 5500-EZ obtained from the IRS, and use blue or black ink for a wet signature if you wish to mail it to the IRS. Print, sign and date before mailing.

7. Do not use a felt tip pen or other inks that bleed through, the other side should be blank.

8. Do not use arrows or make notes on the IRS Form 5500-EZ and only enter information in the specific fields provided. Abbreviate if necessary.

9. Do not include schedules or attachments. However, you should retain them for your records.

Penalties

The Internal Revenue Code imposes a penalty of $25 a day (up to $15,000).

Completing the IRS form 5500-EZ

It is important to work with a tax professional when completing the IRS Form 5500-EZ. When working with IRA Financial Group, our tax professionals will help you complete and file the IRS Form 5500-EZ if your plan has assets valued at $250,000 or above as of December 31 of the previous year as part of our compliance services.

PART I – Annual Return identification Information

Enter the beginning date of the plan and then the ending date.

A) Check (1) for the first return filed for the plan. If this is not the first year filing then leave this unchecked.

B) Typically, do not check this box unless filed Form 5558 for an extension of time.

C) Typically, do not check this box unless this plan is maintained outside the United States.

PART II – Basic Plan Information

1a) Enter the name of the plan as it appears on the EIN letter from the IRS:

ABC Consulting 401(k) Trust

1b) Enter the numbers 001 for this year and every year’s future fillings use the same number. Note – if this plan will be amending an existing solo 401(k) Plan, you will need to include the appropriate 3 digit code (i.e. 002), which can be found in the plan Adoption Agreement.

1c) The date the plan became effective is found in Section One of your Adoption Agreement.

2a) Enter the name of the Adopting Employer:

ABC Consulting LLC
dba or c/o if applicable
1234 Ginger Street (P.O. Box ONLY if USPS does not deliver)
Family, FL

2b) Enter the Adopting Employer EIN XX-XXXXXXX no SS#. If plan is under a Sole Proprietor, YOU MUST OBTAIN AN EIN FROM THE IRS by completing the online application: Apply for an EIN

Alternatively, you can acquire an EIN by preparing and faxing the Form SS-4 to the IRS at I-800-829-3676 then call 1-800-829-4933 to receive your EIN by phone. The EIN is issued immediately once the application information is validated.

2c) Enter the Adopting Employer telephone number: 888-888-8888.

2d) Enter the 6 digit applicable code XXXXXX that best describes the nature of the plan sponsors business from the list of principal business activity codes included at the end of the instructions.

3a) Enter the Plan Administrator information OPTIONAL. If preparer is the same as above, enter the same information.

3b) Enter and repeat the same EIN XX-XXXXXXX number as listed in 2b.

3c) Enter the Plan Administrator telephone number: 888-888-8888.

4a) Enter the name of the Trust: ABC CONSULTING 401K TRUST.

4b) Enter the EIN number as it appears on the EIN letter from the IRS: XX-XXXXXXX.

4a), 4b) and 4c) is not required if no changes were made to the plan.

5a(1)) Enter the total number of participants at the beginning of the year. If solo 401K plan: Ex: 1participant. Note – if the plan will include the spouse of a participant or a second business owner, then the appropriate number would need to be included (i.e. 2).

5a(2)) Enter the total number of active participants at the beginning of the year.

5b(1)) Enter the total number of participants at the end of the plan year. If solo 401K plan: Ex: 1participant. Note – if the plan will include the spouse of a participant or a second business owner, then the appropriate number would need to be included (i.e. 2).

5b(2)) Enter the total number of active participants at the end of the year.

Active participants include individuals who are currently employed and are eligible to have deferral or profit sharing contributions made on their behalf to the plan.

PART III – Financial Information

6a(1) Enter the “Total Plan Assets” or the same amount in 6a(2) from last year; if filed IRS Form 5500-EZ previously. Otherwise, this figure includes “Total Plan Assets” as: rollovers, unrealized gains and losses such as appreciation/depreciation in assets. It also includes specific assets held by the plan at any time during the plan year (for example, partnership/joint venture interests, employer real property, real estate (other than employer real property), employer securities, loans (participants and non-participant loans), and tangible personal property). Please do not include contributions.

6a(2) Enter end of year “Total Plan Assets” as listed above. Please do not include contributions. NOTE: “Total Plan Assets” should include the amount of any liabilities, including, for example, mortgages.

6b(1) Enter “Total plan liabilities” to include but are not limited to benefit claims payable, operating payables, acquisition indebtedness (i.e. nonrecourse loan) and other liabilities. Do not include the value of future distributions what will be made to participants.

6b(2) Enter end of year “Total plan liabilities” as listed above.

6c(1) Enter “Net plan assets” the sum of by subtracting 6b(1) from 6a(1).

6c(2) Enter end of the year “Net plan assets” sum of by subtracting 6b(2) from 6a(2).

7a) and 7b) Enter total cash contributions received and/or receivable from employer and participants during the plan year.

7c) Enter all contributions including rollovers received from other plans valued on the date of contribution.

PART IV – Plan Characteristics

8) Enter the applicable two-character feature Codes. In most cased, the following codes would be used: 2E, 2J, 3B, 3D. Note, if your plan assets are held in a brokerage account, then you would want to include 2R.

PART V – Compliance and Funding Questions

9) Check YES if any of the participants entered into a loan from the plan and the amount or NO if not applicable.

10) Check NO.

10a) Enter N/A for amount.

11) Check NO.

12) Enter the date of the opinion letter and the opinion letter serial number.

IRA Financial offers all its current Solo 401(k) Plan clients that are required to file an IRS Form 5500-EZ the necessary support to make sure that the form is completed properly. All Solo 401(k) Plan clients required to file the IRS Form 5500-EZ will have access to our team of tax specialists to help prepare and file it.

Contact us today for more information or help on filling out the form.