IRA Financial’s Adam Bergman reinforces the reasons why you need to file Form 5500 if you have at least $250,000 in your Solo 401(k). You can be penalized up to $150,000 if you fail to file!
In This Podcast
As we talked about in our last podcast, if you are self-employed and utilize the Solo 401(k) plan AND you have $250,000 in assets, you must file IRS Form 5500. Failure to do so will lead to stiff penalties. The form is actually quite simple and it’s simply used to report the assets in the plan. There are no taxes to be paid and only information about the plan is required.
The SECURE Act increased the penalty for failure to file Form 5500 to $250 per day, up to a maximum of $150,000! Filing is easy and if you are an IRA Financial client, we will help you. All you need are the details of the plan and the assets held within.
If you do not have reasonable cause for late filing and did not file an extension, you must submit the form to the IRS by July 31. Once that date passes, you will start getting hit with the penalties. If you did miss the deadline for whatever reason and you are not under audit, you may be eligible for the Penalty Relief Program for Form 5500-EZ Late Filers. If qualified, you would only face $500 in annual penalties.
Obviously, penalties eat away at your bottom line and this is one that easy enough to avoid. If your account balance reaches that $250,000 by December 31 of the previous year, you should start thinking about Form 5500 as soon as reasonable. Ensure that you file it before the deadline and you won’t face any penalties!
Stay In Touch
We always appreciate our listeners and we hope you will continue to listen and spread the word. You can find AdBits on SoundCloud, YouTube or your favorite streaming platform. Thanks for listening and if you have any topics you want to see covered, give us a call @ 800.472.0646 today!
Join us next episode as Mr. Bergman discusses the Unrelated Business Taxable Income (UBTI) rules and how certain investments may be taxed.