If the total combined assets of single or multiple Solo 401(k)(s) exceeds $250K, an IRS Form 5500-SF must be filed for each of the employer's one-participant plans.
What if I have just one Solo 401(k) Plan?
If your plan is above $250,000 in assets, it is necessary to file a form 5500.
If your plan is below $250,000 in assets, it is optional to file a form 5500. You must still keep a plan below $250,000 compliant with IRS law. If you get audited with a non-compliant plan, you are still responsible for possible penalties from the IRS.
What if I have two or more Solo $401(k) Plans?
Let's say you have more than one Solo 401(k). Separately, the balance in either plan is not above $250k but combined the plan balances are above $250k. Do I need to file a form 5500 for both plans?
The IRS has addressed this contingency. If a plan meets all the requirements for filing Form 5500-SF, and its total assets (either alone or in combination with one or more one-participant plans maintained by the employer) exceed $250,000 at the end of the plan year, Form 5500-SF must be filed for each of the employer's one-participant plans including those with less than $250,000 in assets for the plan year.
Why does Rocket Dollar use the Form 5500-SF? What about the Form 5500-EZ?
Rocket Dollar uses the Form 5500-SF when assisting customers because it can be filed electronically.
Both are similar documents that are shorter and easier to complete than the basic form 5500, which is usually used for Employer 401(k) plans with multiple common-law employees.