Year-end Solo 401(k) Contribution Questions | C-Corporation Solo 401k

I was successful and presenting your Solo 401k trust establishment documents to my banker at Chase Bank and opened the Solo 401k bank account with Chase. Thank you for your Wells Fargo contact information. I may still end up at Wells Fargo if my relationship with Chase changes at some point.  Chase cleared everything through their legal department and got on board with your instructions so everything worked as planned. I made my initial Solo 401k contribution of $1,500.00 to fund my new Solo 401k plan.

QUESTION: I have a couple of questions related to year-end tax planning. It is my understanding that I can do an employer contribution up until the date of filing my tax return and the employer contribution will act as a reduction in self-employed income and not be subject to self-employment tax since my self-employed business is a C-corporation.  Is that correct?  I am planning on doing an employer contribution of $56,000 for 2019.  I have the self-employment income to more than cover the $56,000.

ANSWER: Because your business type is a C-Corporation, both of your Solo 401k contribution types (employee and employer) will be based on W-2 income generated from your self-employed business.

Visit Solo 401k contribution calculator to determine your maximum contribution for the tax year.

Please also visit calculating Solo 401k contribution for a Corporation for detailed instructions.

QUESTION: Early next year, I will roll-over additional funds from an existing IRA into my self-directed solo 401k plan but probably no more than $125,000. I am waiting until I identify a suitable real estate investment. For this tax year, what forms related to the self-directed solo 401k, if any, will I need to file with the IRS?

ANSWER: Since you did not rollover any other retirement funds to your new Solo 401k this year, no 1099-R reporting is required. Since your business type is a C-corporation, deduct Solo 401k contribution on the corporate tax return, IRS Form 1120. Further, since your account balance is under $250,000, informational return Form 5500 EZ for Solo 401k is not required. Lastly, as long as you did not make any distributions from your Solo 401k no distribution reporting applies.

Thanks in advance,


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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