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QUESTION: Is a Form 1099-R Required for Voluntary After-Tax Self-directed Solo 401k Contributions?
The answer is no because the voluntary after-tax Solo 401k contribution itself is not reportable.
For example, if the self-employed business is taxed as a sole proprietorship or partnership, there’s no place to report those voluntary after-tax contributions like there would be if you’re making a pretax contribution to reduce your taxable income.
If your business is taxed as an S-corporation the contribution is not an employer contribution so it is not reportable on the S-corp tax return (1120-S).
While a voluntary after-tax Solo 401k contribution is an employee contribution, the W-2 instructions are clear that reporting of voluntary after-tax contributions is optional.
Keep in mind that the subsequent transfer from the subaccount for voluntary after-tax contributions to a Roth solo 401(k) subaccount or a Roth IRA is reportable on a 1099-R.
Moreover, we handle the required 1099-R reporting as part of our service for no additional charge.
Our clients simply let us know about the transfer by completing the applicable online form (which is available 24/7).