Paying the Mandatory 20% Federal Tax Amount Due on Solo 401k Distributions

How to pay the mandatory 20% federal tax amount on Solo 401k distributions: 

  • 15th of the Month: Must pay tax electronically by the 15th of the month following your Solo 401k distribution date.
  • Solo 401k EIN: Use the Solo 401k Employer Identification Number when making the 20% Federal tax payment.
  • Electronic: Electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS).
  • Tax Professional: If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. ( I recommend this method vs EFTPS since you don’t process a large number of distributions.)
  • EFTPPS: EFTPS is a free service provided by the Department of Treasury. To get more information or to enroll in EFTPS, call 1-800-555-4477.
  • You can also visit the EFTPS website at https://www.eftps.gov/eftps/Additional information about EFTPS is also available in Publication 966.
  • Please also visit our website for tips on how to enroll in the EFPTS system: https://www.mysolo401k.net/enrolling-in-eftps-to-pay-taxes-due-on-solo401k-taxable-distribution/
  • Deposit record.   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with your successful payment. The number can be used as a receipt or to trace the payment.
  • Depositing on time.   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p.m. Eastern time the day before the date the deposit is due. If you use a third party to make a deposit on your behalf, they may have different cutoff times.

Additional Reporting Applies to Solo 401k Distributions, which is your responsibility CLICK HERE to learn more. 

SOLO 401(K)

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