When determining whether or not you must file From 5500 by July 31st (for plans with a December 31st year-end), it is important to know what funds must be included in the calculation to see if the $250k threshold has been surpassed.
To determine if the $250k limit has been met, you will need to consider:
The total plan assets for all participants' accounts under the Self-Directed Solo 401k plan must be added together to determine if the cumulative balance is over $250k. So, for example, the individual accounts for spouses and partners under the same plan will all need to be included in the calculation.
All traditional, alternative, and cash investments need to be added together to get the total value.
If you took a loan out of your solo 401k, the balance of the loan as of December 31st is treated as an asset, not a liability, so it must be included in the calculation to determine if the $250k threshold filing requirement has been met.
IMPORTANT: If you participate in multiple solo 401k plans, all the assets from all of the plans must be aggregated to determine if the $250k threshold has been met.
If you have determined that the plan's value is over $250k, here's some useful filing information:
In the past, there were two types of From 5500 that could potentially be filed: Form 5500-SF and Form 5500-EZ. "Beginning January 1, 2021, the Form 5500-SF can no longer be used to electronically file “one-participant” plan or foreign plan annual returns. Employers who sponsor one-participant plans or foreign plans must file Form 5500-EZ electronically using the Department of Labor’s EFAST2 filing system. Only employers not subject to the IRS e-filing requirements under Treas. Reg. 301.6058-2 may file paper Form 5500-EZ with the IRS." Source
The following information was pulled from the DOL's website: Help With The Form 5500-EZ - EFAST2 Filing (dol.gov)
"The Form 5500 Version Selection tool can help determine if you are eligible to file the Form 5500-EZ.
Beginning January 1, 2021, the Form 5500-EZ can be filed electronically using certain EFAST2-approved third-party software or using this website’s IFILE tool. The Form 5500 Series Quick Start Guide provides an overview of how to file. For more detailed information on how to file, see the EFAST2 FAQs and other publications.
Instructions and forms for the Form 5500-EZ are maintained by IRS.
You must generally file the return on the last day of the seventh month after your plan year ends (July 31 for a calendar-year plan). Extensions for up to 2½ months may be requested in advance by filing the Form 5558 with the IRS. The IRS may announce special extensions of time for filers affected by Presidentially-declared disasters or who are serving in a combat zone.
If you are applying for IRS’ Penalty Relief Program for Form 5500-EZ Late Filers, you must file a paper Form 5500-EZ and Form 14704 with the IRS. A Form 5500-EZ filer is not eligible for penalty relief under the Department of Labor’s Delinquent Filer Voluntary Compliance Program (DFVCP).
If you are filing an amended return for a one-participant plan or a foreign plan to correct errors or omissions, please see EFAST2 FAQs 4b how to submit amended Form 5500-EZ return.
Copies of submitted Form 5500-EZ filings may be requested by filing the Form 4506 with the IRS.”
Failure to file Form 5500 on time can result in stiff penalties, so it’s important to understand and comply with the filing rules and requirements.
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