Solo 401k Plans Retroactively Adopted After the End of the Plan Year have No 2020 Form 5500-EZ Filing Requirement

The SECURE ACT of 2019 allows a solo 401k plan to be adopted after the close of the self-employed business taxable year (by the due date, including extensions, for filing its tax return for the taxable year) and elect to treat the plan as having been opened as of the last day of the taxable year. This new rule applies to solo 401k plans adopted/opened for taxable years beginning after December 31, 2019.

As such, if the owner-only business adopts a solo 401k in 2021 by the business return due date including the business extension, and opts to have the solo 401k plan effective as of the last day of the business 2020 taxable year, a Form 5500-EZ will not be required to be filed for 2020.

The first Form 5500-EZ for the solo 401k plan will be required to be filed starting the with the 2021 plan year if the total fair market value of the solo 401k plan exceeded $250,000 as of 12/31/2021, so the firsts Form 5500-EZ would be due to the IRS by 07/31/2022. Lastly, a box will need to be checked off on the 2021 Form 5500-ez to communicate to the IRS the plan was retroactively adopted as of the last day of the self-employed business 2020 taxable year.

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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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