For those of you with self-directed 401(k) plans, the IRS Form 5500-EZ may or may not apply to you. Whether or not you have to file the 5500-EZ for your Solo-K plan is based on whether the value of the plan’s assets exceed $250,000. It is important to note that while many people believe the 5500-EZ is only for a self-administered 401(k) plan, in reality, the requirement is for any individual 401(k) plan with assets over the noted threshold, regardless of whether the plan is self-directed or not (e.g., you could have your individual 401(k) plan at Morgan Stanley (ex.) and never self-direct the investments of the plan.
Also, one helpful hint related to the filing requirement. Many spouses work together in a spouse/spouse owned business which, if correctly established, still qualifies for a one-participant plan. However, many spouses in the spouse/spouse business incorrectly believe that the $250,000 threshold applies to each individual. Keep in mind that the $250,000 threshold applies to the plan, not necessarily the individual. As an example, if both spouses had $200,000 in the plan ($400,000 total between the two), the plan would still need to file the annual 5500-EZ as the plan had assets in excess of $250,000.
This reminder is being sent out as the IRS has a new DRAFT Form 5500-EZ (provided by the good folks at Benefitslink) For those this may apply to, it is just what changes may be occurring with the upcoming 5500-EZ. Please keep in mind that this is a DRAFT; therefore, it is not official and may change in substance.
As always, the information provided is intended to be educational in nature. It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice. You must always consult with your respective professional in all such matters.