Solo 401k or Individual 401k and Filing Form 1099-R with the IRS

Solo 401k or Individual 401k participants/trustees use IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to submit paper Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to the IRS.

Filing for Extension for Reporting Solo 401k or Individual 401k Distribution

Form 8809, Request for Extension of Time to File Information Returns, is used to request an extension of time to file Form 1099-R. This request must be submitted by the due date of the 1099-R return. This form may be used to request an extension of time to file information returns submitted on paper to the IRS.

Automatic 30-Day Extension

The automatic extension requirements are outlined in Treas. Reg. 1.6081-8. The regulations allow for an automatic 30-day extension to filers of Form 1099-R, that submit Form 8809 to the IRS by the deadline for filing the 1099-R form. The Solo 401k or Individual 401k trustee/participant that fills out the remaining Form 8809 information properly and files Form 8809 on or before the date prescribed for filing the Form 1099-R to report distributions from their Solo 401k or Individual 401k return will automatically qualify for a the 30-day extension.

Additional 30 Day Extension

One additional 30 day extension may be allowed provided the Solo 401k or Individual K filer submits a request before the expiration of the automatic 30-day extension. To process the request the following applies:

  • is submitted on Form 8809,
  • provide detailed explanation as to why the additional time is needed, and
  • include the filer’s (Solo 401k trustee’s) signature.

Federal Income Tax Withholding Applicable to Solo 401k or Individual 401k

Since Solo 401k or Solo k distributions are for the most part includible in the taxable income of the participant/trustee, the withholding for federal income taxes applicable to distributions is the responsibility of the Solo 401k or Individual 401ktrustee. Consider the following two primary items when determining the proper amount to be withheld from the Solo 401k distribution: 1) the type of distribution the participant/trustee is receiving and 2) whether any part of the distribution includes after-tax contribution amounts or Roth Solo 401k contributions.

Who is Responsible for the Tax Withholding on Solo 401k or Individual 401k Distributions?

Treasury regulations provide that the plan administrator (usually the employer or trustee) is responsible for the withholding on Solo 401k or Individual 40k distributions. This is outlined in Treas. Reg. 35.3405-1T, A-13. The following information is helpful for preparing Form 1099-R:

  1. Name, address, and social security number of the payee (Solo 401k Trustee or participant) and the payee’s spouse or other beneficiary, if applicable;
  2. The existence and amount of any premiums paid for the current cost of life insurance that were previously includible in income;
  3. A statement of the reason (e.g., death, disability, retirement) for the payment or distribution;
  4. The date on which payments commence and the amount and frequency of payments;
  5. The age of the payee and of the payee’s spouse or designated beneficiary, if applicable; and
  6. Any other information required by IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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