Rocket Dollar Won’t File 5500-EZ or 1099-R — What Now? How to Upgrade & Avoid Compliance Risk

Understanding the Service Discontinuation

Rocket Dollar’s recent announcement has left many Solo 401k plan owners wondering about their compliance obligations and next steps. The two forms in question—Form 5500-EZ and Form 1099-R—are critical IRS requirements that carry significant compliance risk if not filed correctly and on time.

As a result of this change, Rocket Dollar clients are now solely responsible for ensuring these filings are completed accurately and submitted by their respective deadlines to maintain plan compliance.

Form 5500-EZ: When Is It Required?

Form 5500-EZ is an informational filing required by the IRS once your Solo 401k plan assets exceed a specific threshold. Understanding when this form becomes necessary is essential for maintaining compliance.

The $250,000 Threshold

Form 5500-EZ must be filed once the total value of your Solo 401k plan assets exceeds $250,000 as of December 31st of any calendar year. This threshold calculation includes:

• All investment account values within your Solo 401k
• Cash held in Solo 401k bank accounts
• Any defined benefit plan assets (if you also maintain a defined benefit plan for your business)
• All participant sub-accounts (for example, if both spouses participate in the plan)

Form 1099-R: Event-Based Reporting

Unlike Form 5500-EZ which is based on asset values, Form 1099-R is triggered by specific transactions or events involving your Solo 401k plan. This form reports distributions and certain internal transfers to both the participant and the IRS.

When Is Form 1099-R Required?

Form 1099-R must be issued when any of the following events occur:

• Taxable Distributions: When money is withdrawn from the plan and subject to ordinary income tax
• Rollovers: When funds are transferred to another retirement account (such as an IRA or employer plan)
• Pre-tax to Roth Conversions: When funds move from the pre-tax Solo 401k account to the Roth Solo 401k account (in-plan conversion)
• After-tax to Roth Conversions: When after-tax contributions are converted to Roth—a key component of the Mega Backdoor Roth strategy

Solutions for Rocket Dollar Clients: Plan Restatement

Now that Rocket Dollar has discontinued support for these critical compliance filings, clients need a reliable solution to maintain their Solo 401k plan compliance. The answer is plan restatement—a straightforward process that allows you to upgrade your plan documents while preserving your existing accounts and investments.

What Is Plan Restatement?

Plan restatement is essentially a “cut and paste” process where you replace your existing Rocket Dollar plan documents with new plan documents from a different provider. Think of it as upgrading the governing documents of your plan without disrupting your existing investments or accounts.

When you restate your plan with My Solo 401k Financial, you’re not starting from scratch. Instead, you’re:

• Keeping your existing plan name (if desired)
• Maintaining your current EIN (Employer Identification Number)
• Preserving your existing bank and brokerage accounts
• Continuing your investment strategies without interruption
• Gaining access to comprehensive compliance support

The Restatement Process: Step by Step

1. Sign Up with My Solo 401k Financial: Complete the enrollment process for your restated plan documents
2. Receive New Plan Documents: We draft your restated plan documents within the same business day
3. Maintain Existing Accounts: Your current bank and brokerage accounts remain operational under the new plan documents
4. Optional Account Changes: Open new accounts if desired, either during onboarding or later
5. Activate Compliance Support: Immediately gain access to Form 5500-EZ and Form 1099-R filing assistance provided as an optional free service

Bonus Benefits: $1,500 in Solo 401k Tax Credits

Beyond solving your compliance challenges, upgrading to My Solo 401k Financial plan documents unlocks an additional financial benefit: eligibility for $1,500 in Solo 401k tax credits.

How the Tax Credits Work

These credits are available to plans that include an automatic enrollment feature with proper notices. Our plan documents automatically include these features, making your business immediately eligible for:

• $500 per year in tax credits
• Available for three consecutive years
• Total value: $1,500
• Available to both new and upgraded (restated) plans

Understanding the Auto-Enrollment Feature

The automatic enrollment feature sets a 3% default contribution percentage. However, it’s important to understand that:

• As the plan participant, you have the right to opt out of the 3% default
• Opting out does not disqualify you from claiming the tax credits
• You can still contribute whatever amounts you prefer (subject to annual limits and deadlines)

This means you can claim the full $1,500 in credits over three years regardless of whether you actually use the auto-enrollment feature.