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IRA Financial Solo 401(k) In-House Tax Filing, IRS Reporting, and Annual Consulting Services

Solo 401(k) Consulting Services

IRA Financial is the only Self-Directed Solo 401(k) provider that offers its 401(k) clients an in-house tax filing, IRS tax reporting, and annual tax consulting service.  Starting in 2024, the annual service will also handle BOI reporting requirements under the Corporate Transparency Act (CTA) with FinCEN.

IRA Financial has designed a specialized Solo 401(k) tax annual tax filing and compliance service, which will now offer our clients the necessary IRS filing services to keep your plan in IRS compliance.   Now – as part of annual consulting service, IRA Financial will prepare and file Form 1065 (U.S. Return of Partnership Income), Form 990-T (UBIT income tax return), IRS Form 5500-EZ, IRS Form 1099-R, and the BOI Report with FinCEN.

The following are the IRS tax forms that IRA Financial will now help file for your Self-Directed Solo 401(k) plan.

IRS Form 1065 – U.S. Return of Partnership Income

With a Self-Directed Solo 401(k) plan with checkbook control, a special purpose LLC is established that would be owned by the 401(k) and managed by the 401(k) trustee (you). As manager of your Solo 401(k) LLC, you have the authority to make IRS-approved alternative asset investments on behalf of your 401(k) on your own, in privacy, and with limited liability protection. With a Solo 401(k) with Checkbook Control, you will be able to make investments, such as real estate, by simply writing a check.  Since all your 401(k) funds will be held at a local bank in the name of the 401(k) LLC, all you would need to do to make the investment is write a check straight from the 401(k) LLC bank account or simply wire the funds.

In the case of a Self-Directed Solo 401(k), a single-member IRA LLC is not required to file a partnership return (IRS Form 1065) as it is treated as a disregarded entity for federal income tax purposes. However, an LLC owned by two or more retirement accounts is treated as a partnership for federal income tax purposes, and, in general, a partnership return (IRS Form 1065) must be filed BY MARCH 15, 2024 for the 2023 taxable year.  

IRS Form 990-T – UBIT income tax return

Form 990-T is the tax form where a charitable organization or retirement account, such as a Solo 401(k), reports income that would be subject to the unrelated business taxable income tax (UBTI or UBIT). In general, a Solo 401(k) plan will trigger the UBTI tax in the following circumstances:

  1. Use of a nonrecourse loan to acquire an asset, such as stock
  2. Investment in an active business operated through a pass-through entity, such as an LLC

For Solo 401(k) investors who will have unrelated business taxable income or unrelated debt-financed income (UDFI) in excess of $1,000 after taking into account allowable deductions and expenses, such as depreciation, debt servicing, etc., the IRA would be required to file IRS Form 990-T, and Schedule A by April 15, 2024, for the 2023 taxable year. Filers may request an automatic extension of time to file Form 990-T by using Form 8868, Application for Automatic Extension of Time to File an Exempt Organization Return.

The return must be filed by the 401(k) plan and not by the individual or plan trustee. In addition, the retirement account should acquire its own tax Identification number if it does not already have one.

IRS Form 5500-EZ

The IRS Form 5500-EZ is an annual information return that is required to be filed by every “One-Participant Plan” (owners and their spouses) 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 plan’s assets is to inform the IRS of assets over $250,000 annually held in a Solo 401(k) plan. The Form 5500-EZ is due every July 31st of the next plan year. Ex: for a plan that was established in 2023, the IRS Form 5500-EZ is due by July 31st, 2024.

IRS Form 1099-R

IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., must be filed for each Solo 401(k) plan participant that either made a distribution, Roth conversion, or 401(k) rollover. For the 2023 tax year, February 15, 2024 is the due date to distribute recipient copies. February 28, 2024 is the due date if you choose to file by paper, and March 31, 2024 is the deadline for Form 1099-R electronic filing.

BOI Report

Beginning on January 1, 2024, a significant number of companies in the United States will have to report information about their beneficial owners (the individuals who ultimately own or control the company). The beneficial owners will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.

All entities formed or registered to do business in the United States will need to either (i) confirm they qualify for an exemption from the CTA’s reporting requirements or (ii) timely submit a BOI report to FinCEN.

A Reporting Company must disclose the following information with regard to each individual beneficial owner to FinCEN via the BOI report:

  1. full name.
  2. date of birth.
  3. complete current residential street address.
  4. ID number and jurisdiction of issuance for one of the following:
    • US passport
    • state, local, or Indian tribal identification document, or
    • state-issued driver’s license; and
  5. an image of the document from which the ID number was obtained. If the individual has none of the above listed documents, a passport issued to them by a foreign government will suffice.

Does my Solo 401(k) Need to File a BOI?

A full-service Solo 401(k) is exempt from filing a BOI report. The BOI requirements under FinCEN will only apply if your Solo 401(k) owns an entity, such as an LLC (“checkbook control”), and you, as the 401(k) trustee, manages the entity.

Does my Solo 401(k) LLC Need to File a BOI?

Under the CTA rules, a Solo 401(k) LLC would be deemed a reporting company and would, thus, be required to file a BOI report with FinCEN.  A “Checkbook Control 401(k)” is an investment structure where a 401(k) plan owns an LLC and is managed by the plan trustee. Since the BOI report must be completed by an individual and a 401(k) is not an individual, but a retirement account, the report would need to include the information for the 401(k) owner, who is the person in control of the LLC as the manager.

Solo 401(k) LLC Established Prior to January 1, 2024

If you have a Solo 401(k) LLC that was established prior to January 1, 2024, you will until December 31, 2024 to complete the BOI report with FinCEN.

Solo 401(k) LLC Established After January 1, 2024

If you establish a Solo 401(k) LLC on January 1, 2024 or later, a BOI report will be required to be filed with FinCEN within 90 days of formation.

Will IRA Financial will File the BOI Report with FinCEN for My Solo 401(k) LLC?

In order to relieve our clients of the stress and responsibility of acquiring a FinCEN number and filing a BOI report for their Solo 401(k) LLC, we will be offering this service to all our clients that have elected to join our annual consulting/compliance program. Note – we can only file the BOI report if ALL members of the entity are retirement accounts administered by IRA Financial.

Conclusion

IRA Financial has helped over 24,000 clients with over $3.2 billion in assets take control of their future by investing in alternative assets with a self-directed retirement plan. We are proud to be the only self-directed retirement company that offers an in-house tax filing, IRS reporting, and annual tax consulting service for its Self-Directed Solo 401(k) clients. IRA Financial is the only self-directed retirement company that will handle all your Solo 401(k) setup, administration, and IRS tax filing/reporting needs.

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