Menu Close

IRA Financial Group Blog

Reporting a CARES Act Distribution, Solo 401(k) Contributions and more | Client Q&A

AdMail Podcast
3 Minute Read

IRA Financial’s Adam Bergman Esq. answers questions about Solo 401(k) contributions, reporting a CARES Act distribution and a step-by-step breakdown of opening an account at Gemini Exchange.




Question 1 from YouTube: So, my wife, who is over 50 and is a sole proprietor with schedule C income, doesn’t have a retirement plan. She made $11,000 in 2020. If she opened up a Solo 401(k) now in Jan 2021, how much could she contribute to it for 2020.

Thanks to the SECURE Act, you have until you file your taxes, plus extensions, to set up a Solo 401(k) for the previous tax year. However, you are only allowed to make profit sharing contributions after December 31 of the previous year. These are the contributions you make as the employer, not the employee.

The amount you can contribute as an employer is based on a percentage of your business income. Because this is Schedule C income, she can contribute up to 20% of that. Therefore, since she earned $11,000 in 2020, she may contribute $2,200 to her Solo 401(k) for the 2020 taxable year. Of course, now that the plan is set up, she can take full advantage of the Solo 401(k) contribution limits for this year and beyond.

Question 2 from YouTube: CARES Act distributions: Do you include the 1099-R in your taxes as well as the 8915-E form, or is that form enough?

Originally, we thought the custodian would have to file a 1099-R on your behalf when you took a CARES Act distribution. However, that is not the entire story. They will still file that form. If you received a coronavirus-related distribution from your retirement plan, it is up to you to fill out Form 8915-E. That gets attached to your 1040 when you file your taxes. If you have a Solo 401(k), you, as the plan holder, are charge of filing these forms.

Of course, you can choose to pay the taxes in full, or spread them out over a three year period. If you choose to re-contribute those funds to any retirement plan within that time frame, you will not owe taxes on the amount contributed. In fact, if you pay taxes in year one and then fund your retirement plan, you can amend earlier returns to get a refund of taxes paid.

Question 3 from YouTube: Would like to know how to set up an account with Gemini, step-by-step.

Setting up an account with Gemini, to use your IRA Financial retirement plan to invest in cryptocurrencies is fairly straightforward. Here’s a breakdown of the steps you need to take:

  • First, you sign up on our app and choose that you want to invest in cryptos.
  • Next, you will receive a link via email to set up an account on Gemini
  • You will then fund the retirement account, either via rollover or direct contributions
  • Once the account has been funded, you fill out an investment authorization form.
  • Within a day or so, your Gemini account will be funded with your retirement money.
  • You are now ready to buy, sell and trade cryptos on Gemini using your retirement account!

The process is really quite easy and you can get started rather quickly. IRA Financial charges a flat fee for the account setup of $300. Depending on the type of trading you do on Gemini, fees can vary from a couple bucks per transaction, up to 1.49%. The active trader program allows for 0.35% in fees based on how much you transact in a given month (that percentage drops even further the more you trade).

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at abergman@irafinancial.com.

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!

Related Articles