How can I close my Solo 401(k)?

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Topic Author
chaser
Posts: 109
Joined: Fri May 16, 2008 5:00 pm

How can I close my Solo 401(k)?

Post by chaser »

[Moved into a new thread from: Vanguard to Exit Individual 401(k), Multi-SEP, and SIMPLE IRA Plans With Ascensus Deal --admin LadyGeek]

I had already been thinking about closing my Solo 401K before this news because my business has been dying and I haven't been able to make contributions. Also, I'm always stressed out about the compliance for the Solo 401K because I know the penalties are egregious. So I'm thinking maybe this news is the final straw to make me close it.

What is the common or best way to close my Solo 401K? I am not at retirement age, so I presume there is some way to roll it into something else? Since there is an Employee Roth portion, and an Employer Non-Roth portion, I know these parts need to continue to be separated. So what is this rolled into? Is it rolled into a separate respective Roth IRA and Traditional IRA?

And I know there is a requirement to file a final Form 5500-EZ. The 2024 forms are not available yet. How much time do I have to file the final form once I close it? I'm worried the form might not be available yet if I close too soon. Also, for Form 5500-EZ, what dates would I use "For the calendar plan year 2024 or fiscal plan year ..."? Would the ending date be the exact date that the plan officially closed, or the end of the normal business calendar year?

I appreciate any details or stories about closing the Solo 401K.
Thank you
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: Vanguard to Exit Individual 401(k), Multi-SEP, and SIMPLE IRA Plans With Ascensus Deal

Post by RoadRat »

chaser wrote: Thu Apr 18, 2024 4:06 pm I had already been thinking about closing my Solo 401K before this news because my business has been dying and I haven't been able to make contributions. Also, I'm always stressed out about the compliance for the Solo 401K because I know the penalties are egregious. So I'm thinking maybe this news is the final straw to make me close it.

What is the common or best way to close my Solo 401K? I am not at retirement age, so I presume there is some way to roll it into something else? Since there is an Employee Roth portion, and an Employer Non-Roth portion, I know these parts need to continue to be separated. So what is this rolled into? Is it rolled into a separate respective Roth IRA and Traditional IRA?

And I know there is a requirement to file a final Form 5500-EZ. The 2024 forms are not available yet. How much time do I have to file the final form once I close it? I'm worried the form might not be available yet if I close too soon. Also, for Form 5500-EZ, what dates would I use "For the calendar plan year 2024 or fiscal plan year ..."? Would the ending date be the exact date that the plan officially closed, or the end of the normal business calendar year?

I appreciate any details or stories about closing the Solo 401K.
Thank you
I am curious about this as well
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

To terminate your Solo 401k plan (assuming it is in good standing and the plan document is up-to-date):

1. Write a brief memo for your files saying you are terminating the plan as of [effective date].

2. Transfer out all plan assets. Tell the provider you have terminated the plan.

3. Complete a final Form 5500-EZ by the end of the 7th month following the plan termination. Use the EFAST2 system to file as you receive proof-of-filing and the system does some filing edit checks before submission. Use the current year’s form available on the system, there are spaces to input the beginning and end (date plan assets were zero) of the plan year. For example, for a plan terminated in 2024, you can use the 2023 form up until the 2024 form is released on 1/1/25. Be sure to check the box for ‘final return’. Also be sure the end of year # of participants and plan assets are zero.
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

HomeStretch wrote: Thu Apr 18, 2024 5:34 pm To terminate your Solo 401k plan (assuming it is in good standing and the plan document is up-to-date):

1. Write a brief memo for your files saying you are terminating the plan as of [effective date].

2. Transfer out all plan assets. Tell the provider you have terminated the plan.

3. Complete a final Form 5500-EZ by the end of the 7th month following the plan termination. Use the EFAST2 system to file as you receive proof-of-filing and the system does some filing edit checks before submission. Use the current year’s form available on the system, there are spaces to input the beginning and end (date plan assets were zero) of the plan year. For example, for a plan terminated in 2024, you can use the 2023 form up until the 2024 form is released on 1/1/25. Be sure to check the box for ‘final return’. Also be sure the end of year # of participants and plan assets are zero.
I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
avalpert1
Posts: 570
Joined: Sat Mar 02, 2024 6:15 pm

Re: How can I close my Solo 401(k)?

Post by avalpert1 »

RoadRat wrote: Thu Apr 18, 2024 5:49 pm
HomeStretch wrote: Thu Apr 18, 2024 5:34 pm To terminate your Solo 401k plan (assuming it is in good standing and the plan document is up-to-date):

1. Write a brief memo for your files saying you are terminating the plan as of [effective date].

2. Transfer out all plan assets. Tell the provider you have terminated the plan.

3. Complete a final Form 5500-EZ by the end of the 7th month following the plan termination. Use the EFAST2 system to file as you receive proof-of-filing and the system does some filing edit checks before submission. Use the current year’s form available on the system, there are spaces to input the beginning and end (date plan assets were zero) of the plan year. For example, for a plan terminated in 2024, you can use the 2023 form up until the 2024 form is released on 1/1/25. Be sure to check the box for ‘final return’. Also be sure the end of year # of participants and plan assets are zero.
I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
As the plan administrator you will need to file the appropriate 1099-r form and as the individual you will want to properly report the rollover on your 1040. There are no tax liability implications assuming you do it correctly (e.g. don't accidently convert traditional to Roth).
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

avalpert1 wrote: Thu Apr 18, 2024 5:54 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm
HomeStretch wrote: Thu Apr 18, 2024 5:34 pm To terminate your Solo 401k plan (assuming it is in good standing and the plan document is up-to-date):

1. Write a brief memo for your files saying you are terminating the plan as of [effective date].

2. Transfer out all plan assets. Tell the provider you have terminated the plan.

3. Complete a final Form 5500-EZ by the end of the 7th month following the plan termination. Use the EFAST2 system to file as you receive proof-of-filing and the system does some filing edit checks before submission. Use the current year’s form available on the system, there are spaces to input the beginning and end (date plan assets were zero) of the plan year. For example, for a plan terminated in 2024, you can use the 2023 form up until the 2024 form is released on 1/1/25. Be sure to check the box for ‘final return’. Also be sure the end of year # of participants and plan assets are zero.
I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
As the plan administrator you will need to file the appropriate 1099-r form and as the individual you will want to properly report the rollover on your 1040. There are no tax liability implications assuming you do it correctly (e.g. don't accidently convert traditional to Roth).
Thank you.
JBTX
Posts: 11405
Joined: Wed Jul 26, 2017 12:46 pm

Re: How can I close my Solo 401(k)?

Post by JBTX »

I recently closed my vanguard solo 401k. Pretty straight forward as explained above. Rolled it over to a vanguard Rollover IRA, and the Roth component to a Roth account. Filed the 5500ez. Seemed pretty easy. Hopefully I didn’t screw anything up.
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
User avatar
vnatale
Posts: 3724
Joined: Sat Jul 31, 2010 8:50 pm
Location: Montague, MA

Re: How can I close my Solo 401(k)?

Post by vnatale »

RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Not clear what "there" is?

Is it?

1) Vanguard

2) or, more specifically the regular IRA with Vanguard
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

vnatale wrote: Thu Apr 18, 2024 7:15 pm
RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Not clear what "there" is?

Is it?

1) Vanguard

2) or, more specifically the regular IRA with Vanguard
Yes, Can I just roll it to the regular Vanguard IRA?
User avatar
vnatale
Posts: 3724
Joined: Sat Jul 31, 2010 8:50 pm
Location: Montague, MA

Re: How can I close my Solo 401(k)?

Post by vnatale »

RoadRat wrote: Thu Apr 18, 2024 7:19 pm
vnatale wrote: Thu Apr 18, 2024 7:15 pm
RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Not clear what "there" is?

Is it?

1) Vanguard

2) or, more specifically the regular IRA with Vanguard
Yes, Can I just roll it to the regular Vanguard IRA?
My answer was going to be NO. That you had to set up a new Rollover IRA account with Vanguard.

However, according to this it seems that you can:

https://www.nerdwallet.com/article/inve ... -ira-guide

401(k) Rollovers: A Quick-Start Guide
You can roll funds from an old 401(k) into another tax-advantaged retirement account, cash it out, or keep it with an old employer.

I'd urge you, though, to find your own authoritative sources that you trust.

I always put high value what I find at IRS.gov, like this:

https://www.irs.gov/retirement-plans/pl ... tributions

Rollovers of retirement plan and IRA distributions

This is THE definitive chart that shows what can go where:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
msj16
Posts: 384
Joined: Tue Oct 19, 2010 1:16 am

Re: How can I close my Solo 401(k)?

Post by msj16 »

How do we file the appropriate 1099-R as plan administrator? Apologies for interrupting the thread.
toddthebod
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Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

msj16 wrote: Thu Apr 18, 2024 7:50 pm How do we file the appropriate 1099-R as plan administrator? Apologies for interrupting the thread.
Who is your plan through and who is the custodian? All the major brokers should do it for you.
msj16
Posts: 384
Joined: Tue Oct 19, 2010 1:16 am

Re: How can I close my Solo 401(k)?

Post by msj16 »

My plan is with Vanguard. Would this form be generated along with the other tax forms Vanguard provides?
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

msj16 wrote: Thu Apr 18, 2024 7:55 pm My plan is with Vanguard. Would this form be generated along with the other tax forms Vanguard provides?
It should be!
User avatar
vnatale
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Location: Montague, MA

Re: How can I close my Solo 401(k)?

Post by vnatale »

msj16 wrote: Thu Apr 18, 2024 7:50 pm How do we file the appropriate 1099-R as plan administrator? Apologies for interrupting the thread.
Who do you have it with?

At the end of 2023 I rolled over the contents of my Vanguard Roth Solo 401(k) to a Rollover Vanguard Roth IRA.

Vanguard supplied me with the 1099-R.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
msj16
Posts: 384
Joined: Tue Oct 19, 2010 1:16 am

Re: How can I close my Solo 401(k)?

Post by msj16 »

Thank you very much vnatale and toddthebod.
HomeStretch
Posts: 11774
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Re: How can I close my Solo 401(k)?

Post by HomeStretch »

RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Yes, you can rollover the Vanguard traditional i401k balance to an existing Vanguard traditional IRA. If you have a Vanguard Roth 401k balance, roll that over to an existing Vanguard Roth IRA.
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

HomeStretch wrote: Thu Apr 18, 2024 8:24 pm
RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm
RoadRat wrote: Thu Apr 18, 2024 5:49 pm I am not the OP. Nevertheless, I greatly appreciate the detailed information. If you could answer one more question. If I transfer assets from the Solo 401k to a regular IRA, are there any tax implications? Probably a dumb question given that both retirement vehicles are pre-tax, but I just want to be certain.
The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Yes, you can rollover the Vanguard traditional i401k balance to an existing Vanguard traditional IRA. If you have a Vanguard Roth 401k balance, roll that over to an existing Vanguard Roth IRA.
Thank you for all the help!
msj16
Posts: 384
Joined: Tue Oct 19, 2010 1:16 am

Re: How can I close my Solo 401(k)?

Post by msj16 »

Note to everyone trying to file with efast:

"EFAST2 website credentials have changed to Login.gov. You can no longer sign into this website with an EFAST2 User ID and Password."
RoadRat
Posts: 115
Joined: Mon Jan 13, 2014 7:12 pm

Re: How can I close my Solo 401(k)?

Post by RoadRat »

vnatale wrote: Thu Apr 18, 2024 7:44 pm
RoadRat wrote: Thu Apr 18, 2024 7:19 pm
vnatale wrote: Thu Apr 18, 2024 7:15 pm
RoadRat wrote: Thu Apr 18, 2024 7:11 pm
HomeStretch wrote: Thu Apr 18, 2024 7:04 pm

The easiest way to handle this is to open an IRA at the i401k provider if they will rollover the plan balance to an IRA directly. Most of the mainstream providers will do this. They will usually issue the Form 1099-R for the distribution.
My existing i401k is with Vanguard. I have an regular IRA with Vanguard as well. Can I just roll it there?
Not clear what "there" is?

Is it?

1) Vanguard

2) or, more specifically the regular IRA with Vanguard
Yes, Can I just roll it to the regular Vanguard IRA?
My answer was going to be NO. That you had to set up a new Rollover IRA account with Vanguard.

However, according to this it seems that you can:

https://www.nerdwallet.com/article/inve ... -ira-guide

401(k) Rollovers: A Quick-Start Guide
You can roll funds from an old 401(k) into another tax-advantaged retirement account, cash it out, or keep it with an old employer.

I'd urge you, though, to find your own authoritative sources that you trust.

I always put high value what I find at IRS.gov, like this:

https://www.irs.gov/retirement-plans/pl ... tributions

Rollovers of retirement plan and IRA distributions

This is THE definitive chart that shows what can go where:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
The chart is most helpful. Thank you.
Topic Author
chaser
Posts: 109
Joined: Fri May 16, 2008 5:00 pm

Re: How can I close my Solo 401(k)?

Post by chaser »

Thank you for all the responses.
In addition to the responses, I found a Vanguard checklist of how to terminate your Individual 401K plan.

https://personal1.vanguard.com/pdf/s550.pdf

So I’d like to put everything together and write a procedure, that the experts here can chime in on. This will be a dry run for me, and hopefully helpful for others in the future.

Procedure:
  1. Amend my plan with a letter indicating that my plan is being terminated on a certain date. I keep this in my records.
  2. Notify myself (the participant) in writing that the plan is being terminated. (I guess I keep this in my records too.)
  3. Call up Vanguard on the phone and tell them the following:
    1. I wish to terminate my Solo 401K plan
    2. I want to rollover the assets in my plan (in kind) to:
      1. a Vanguard Rollover IRA for my Employer (tax deferred) contributions
      2. a Vanguard Rollover Roth IRA for my Employee (post tax) contributions

        * NOTE: I read some other threads that strongly recommend rolling over into separate accounts and avoid commingling with other pre-existing IRAs. I don’t fully understand the reasons for this, but it sounds like there are good reasons and once commingled, you can’t un-commingle. So better safe than sorry?
    3. Make sure Vanguard will file the needed 1099-R(s) (is it just one, or multiple?) on my behalf so I don’t have to file them myself.
    4. Validate with Vanguard everything sounds correct, and nothing here should trigger any taxable events.
  4. After Vanguard completes the transfer of assets and termination (Vanguard told me it might take about 2 days), file the final Form-5500EZ:
    1. I will be using EFAST to file it. (I just filed my annual Form 5500-EZ for 2023 last week, so I know my account access works.)
    2. I have up-to 7 months to file this final form, but I will file this as soon as I can. Regardless, the 2024 Form will not be ready within my time window, so it is okay to use the 2023 Form 5500-EZ.
    3. My Form 5500-EZ will have the following differences compared to my prior filings:
      1. For “For the calendar plan year 2023 or fiscal plan year beginning (MM/DD/YYYY)”, I will put 01/01/2024
      2. And for ending, I will put the date where Vanguard has finished moving my assets and I have $0 left in the plan, e.g. 04/26/2024
      3. In Part 1A: Make sure to check “(3) the final return filed for the plan”
      4. Also in Part1A: Do I also need to check “(4) a short plan year return (less than 12 months)”? (Seems like I should check it.)
      5. Part2 5b(1): “Total number of participants at the end of the plan year” becomes 0.
      6. Part2 5b(2) “Total number of active participants at the end of the plan year” becomes 0.
      7. Part3 6a: "Total End of the Year Plan Assets" will now be 0.
      8. Part3 6c: "Net Plan Assets" will now consequently be 0.
  5. The End
Thank you. I really appreciate everybody's feedback in this forum.
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

See my comments in blue font, below.
chaser wrote: Fri Apr 19, 2024 1:42 am Procedure:
  1. Amend my plan with a letter indicating that my plan is being terminated on a certain date. I keep this in my records.
  2. Notify myself (the participant) in writing that the plan is being terminated. (I guess I keep this in my records too.)
  3. Call up Vanguard on the phone and tell them the following:
    1. I wish to terminate my Solo 401K plan
    2. I want to rollover the assets in my plan (in kind) to:
      1. a Vanguard Rollover IRA for my Employer (tax deferred) contributions
      2. a Vanguard Rollover Roth IRA for my Employee (post tax) contributions

        * NOTE: I read some other threads that strongly recommend rolling over into separate accounts and avoid commingling with other pre-existing IRAs. I don’t fully understand the reasons for this, but it sounds like there are good reasons and once commingled, you can’t un-commingle. So better safe than sorry?
      i401k plans are not covered by ERISA. Two reasons to rollover the i401k balance to a separate Rollover IRA may be:(1) if your state offers additional IRA protections for 401k rollover balances, and (2) in the event of a future reverse rollover of the IRA into a 401k plan with restrictions on the source of the reverse rollover funds.

      Note: Using a separate IRA does not exclude the 12/31 IRA balance from being included on Form 8606 in the calculation of pro-rated taxes on a backdoor Roth, if any.
    3. Make sure Vanguard will file the needed 1099-R(s) (is it just one, or multiple?) on my behalf so I don’t have to file them myself.

      Yes, Vanguard (like many of the mainstream i401k providers) will file Form 1099-R for the distribution of the plan assets.
    4. Validate with Vanguard everything sounds correct, and nothing here should trigger any taxable events.

      Vanguard will not provide tax advice. If they do, don’t rely on it (check with your tax professional).
  4. After Vanguard completes the transfer of assets and termination (Vanguard told me it might take about 2 days),
    Vanguard may need to do a 2nd sweep to transfer out any dividends or interest paid after the 1st sweep. This is usually done automatically. Check your i401k balances after month end to be sure the balance is zero.

    file the final Form-5500EZ:
    1. I will be using EFAST to file it. (I just filed my annual Form 5500-EZ for 2023 last week, so I know my account access works.)
    2. I have up-to 7 months to file this final form, but I will file this as soon as I can. Regardless, the 2024 Form will not be ready within my time window, so it is okay to use the 2023 Form 5500-EZ.

      The filing deadline is the 7 month after the end of the month in which the plan assets were fully distributed. If your plan year end is 4/26/24, the final Form 5500-EZ due date is 11/30/24.
    3. My Form 5500-EZ will have the following differences compared to my prior filings:
      1. For “For the calendar plan year 2023 or fiscal plan year beginning (MM/DD/YYYY)”, I will put 01/01/2024
      2. And for ending, I will put the date where Vanguard has finished moving my assets and I have $0 left in the plan, e.g. 04/26/2024
      3. In Part 1A: Make sure to check “(3) the final return filed for the plan”
      4. Also in Part1A: Do I also need to check “(4) a short plan year return (less than 12 months)”? (Seems like I should check it.) yes, if the plan year end is anything other than 12/31, check the short plan year box.
      5. Part2 5b(1): “Total number of participants at the end of the plan year” becomes 0.
      6. Part2 5b(2) “Total number of active participants at the end of the plan year” becomes 0.
      7. Part3 6a: "Total End of the Year Plan Assets" will now be 0.
      8. Part3 6c: "Net Plan Assets" will now consequently be 0.
  5. The End
Thank you. I really appreciate everybody's feedback in this forum.
If you have a i401k plan loan, that needs to be taken into account.

Keep a copy of the EFAST2 filing and filing confirmation in your files.

IRS Instructions to Form 8606 and the DOL EFAST2 filing guidelines may be helpful to review prior to filing.
Pete3
Posts: 268
Joined: Thu Jul 01, 2010 12:10 pm

Re: How can I close my Solo 401(k)?

Post by Pete3 »

Since I saw several people ask about this and I just went through it myself recently I thought I'd comment on this:
As the plan administrator you will need to file the appropriate 1099-r form
You do not generate the 1099-R, the company that holds yours solo 401k plan will generate it. You will file it with your tax return for the appropriate tax year.

In my case I rolled my Fidelity solo 401k to a Fidelity IRA in 2022, so Fidelity sent me a 1099-R for 2022 with a distribution code (Box 7) of "G" and taxable amount (box 2A) of zero. Distribution code G = Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA.
Topic Author
chaser
Posts: 109
Joined: Fri May 16, 2008 5:00 pm

Re: How can I close my Solo 401(k)?

Post by chaser »

Thank you HomeStretch for the detailed reply notes. And thank you Pete3 for clarifying the 1099-R filing.

1. For the closing date, I will check for a second sweep of dividends/interest. So I guess I will have to record the first date my account goes to 0. If there is no second sweep, I use that date. Otherwise, I use the date after the second sweep and my account goes to 0. So I guess I will need to wait a little bit before filing the final Form 5500-EZ for this to clear.

2. Concerning separate rollovers, I'm in California. I found something about Solo 401Ks being shielded from bankruptcy. I'm not sure about if that extends to rollovers.

3. I never thought about reverse rollovers and think the chance of that for me is extremely unlikely. I liked being able to invest in a variety low fee investments of my choice, and assuming I ever get another job that even let me do a reverse rollover, I expect the fees and investment options to be worse.

4. Due to my specific tax situation, I don't expect to be doing any backdoor Roths. Since I did Roth Solo 401K Employee contributions, my retirement money is roughly equally split between pre-tax and post-tax, so I'm hoping I did an okay job hedging the retirement tax variable.

5. I will check the short plan year box.

6. I do not have any plan loans.

So putting aside the nuiances of whether I should use separate rollover IRAs or not, I think I have a usable procedure. Seems like if I can do a separate rollover, it may give me more flexibility and possible protection, with only the small downside that I can't merge to make a bigger pool of money. Seems like it may be worth it to keep them separate if possible.

Thank you again for all the help.
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

chaser wrote: Sat Apr 20, 2024 3:32 pm 1. For the closing date, I will check for a second sweep of dividends/interest. So I guess I will have to record the first date my account goes to 0. If there is no second sweep, I use that date. Otherwise, I use the date after the second sweep and my account goes to 0. So I guess I will need to wait a little bit before filing the final Form 5500-EZ for this to clear.
The plan account statement will also show the date of the last transfer out to zero out the account.
3Characters
Posts: 1
Joined: Tue Apr 23, 2024 11:03 am

Re: How can I close my Solo 401(k)?

Post by 3Characters »

HomeStretch wrote: Fri Apr 19, 2024 5:26 am See my comments in blue font, below.
chaser wrote: Fri Apr 19, 2024 1:42 am Procedure:
  1. Amend my plan with a letter indicating that my plan is being terminated on a certain date. I keep this in my records.
  2. Notify myself (the participant) in writing that the plan is being terminated. (I guess I keep this in my records too.)
  3. Call up Vanguard on the phone and tell them the following:
    1. I wish to terminate my Solo 401K plan
    2. I want to rollover the assets in my plan (in kind) to:
      1. a Vanguard Rollover IRA for my Employer (tax deferred) contributions
      2. a Vanguard Rollover Roth IRA for my Employee (post tax) contributions

        * NOTE: I read some other threads that strongly recommend rolling over into separate accounts and avoid commingling with other pre-existing IRAs. I don’t fully understand the reasons for this, but it sounds like there are good reasons and once commingled, you can’t un-commingle. So better safe than sorry?
      i401k plans are not covered by ERISA. Two reasons to rollover the i401k balance to a separate Rollover IRA may be:(1) if your state offers additional IRA protections for 401k rollover balances, and (2) in the event of a future reverse rollover of the IRA into a 401k plan with restrictions on the source of the reverse rollover funds.

      Note: Using a separate IRA does not exclude the 12/31 IRA balance from being included on Form 8606 in the calculation of pro-rated taxes on a backdoor Roth, if any.
    3. Make sure Vanguard will file the needed 1099-R(s) (is it just one, or multiple?) on my behalf so I don’t have to file them myself.

      Yes, Vanguard (like many of the mainstream i401k providers) will file Form 1099-R for the distribution of the plan assets.
    4. Validate with Vanguard everything sounds correct, and nothing here should trigger any taxable events.

      Vanguard will not provide tax advice. If they do, don’t rely on it (check with your tax professional).
  4. After Vanguard completes the transfer of assets and termination (Vanguard told me it might take about 2 days),
    Vanguard may need to do a 2nd sweep to transfer out any dividends or interest paid after the 1st sweep. This is usually done automatically. Check your i401k balances after month end to be sure the balance is zero.

    file the final Form-5500EZ:
    1. I will be using EFAST to file it. (I just filed my annual Form 5500-EZ for 2023 last week, so I know my account access works.)
    2. I have up-to 7 months to file this final form, but I will file this as soon as I can. Regardless, the 2024 Form will not be ready within my time window, so it is okay to use the 2023 Form 5500-EZ.

      The filing deadline is the 7 month after the end of the month in which the plan assets were fully distributed. If your plan year end is 4/26/24, the final Form 5500-EZ due date is 11/30/24.
    3. My Form 5500-EZ will have the following differences compared to my prior filings:
      1. For “For the calendar plan year 2023 or fiscal plan year beginning (MM/DD/YYYY)”, I will put 01/01/2024
      2. And for ending, I will put the date where Vanguard has finished moving my assets and I have $0 left in the plan, e.g. 04/26/2024
      3. In Part 1A: Make sure to check “(3) the final return filed for the plan”
      4. Also in Part1A: Do I also need to check “(4) a short plan year return (less than 12 months)”? (Seems like I should check it.) yes, if the plan year end is anything other than 12/31, check the short plan year box.
      5. Part2 5b(1): “Total number of participants at the end of the plan year” becomes 0.
      6. Part2 5b(2) “Total number of active participants at the end of the plan year” becomes 0.
      7. Part3 6a: "Total End of the Year Plan Assets" will now be 0.
      8. Part3 6c: "Net Plan Assets" will now consequently be 0.
  5. The End
Thank you. I really appreciate everybody's feedback in this forum.
If you have a i401k plan loan, that needs to be taken into account.

Keep a copy of the EFAST2 filing and filing confirmation in your files.

IRS Instructions to Form 8606 and the DOL EFAST2 filing guidelines may be helpful to review prior to filing.
Thanks. All very useful. I’m in the same boat as many. Not earning any income to add to the i401k this year — and unlikely next year, so might as well close it and rollover to traditional IRA and Roth IRA, like for like. Only downside seems to be to have to go through the hassle of doing the paperwork of opening an new i401k in the future should there be an income stream.
Topic Author
chaser
Posts: 109
Joined: Fri May 16, 2008 5:00 pm

Re: How can I close my Solo 401(k)?

Post by chaser »

Thanks. All very useful. I’m in the same boat as many. Not earning any income to add to the i401k this year — and unlikely next year, so might as well close it and rollover to traditional IRA and Roth IRA, like for like. Only downside seems to be to have to go through the hassle of doing the paperwork of opening an new i401k in the future should there be an income stream.
The Roth SEP-IRA was introduced last year as part of SECURE ACT 2.0. So maybe by the time you feel you need a new Solo 401k, maybe the Roth SEP-IRA would be "good enough", factoring in all the risks of draconian compliance penalties tied to the i401K. Because it is way simpler compliance-wise than the Solo 401K, I expect it will be offered by a lot more brokerages, and the fees should be a lot lower than the Solo 401K.
ShaftoesSpreadsheet
Posts: 270
Joined: Wed Jan 11, 2017 4:58 pm

Re: How can I close my Solo 401(k)?

Post by ShaftoesSpreadsheet »

Is it OK to make a Solo 401(k) contribution for 2024, then a couple weeks later roll out funds and terminate the plan?

Then I can't reopen a Solo 401(k) or SEP IRA for 12 months?
Topic Author
chaser
Posts: 109
Joined: Fri May 16, 2008 5:00 pm

Re: How can I close my Solo 401(k)?

Post by chaser »

Hi, I have a follow-up question about rolling into a "Rollover IRA" and "Roth Rollover IRA". I just called Vanguard, and the rep had some reservations about the Rollovers because of how their systems are set up. There was a strong preference to move me into a Traditional IRA instead of a Rollover IRA. And they said they don't have a Roth Rollover IRA, so I can only roll into a new Roth IRA.

After some push back, they figured out how we can do the Rollover IRA, but there is no actual Roth Rollover IRA so I will have to settle for a new Roth IRA.

(For contrast, I do know that T. Rowe Price does have an explicit Roth Rollover IRA.)

My question is, how important is it to be in a Rollover version of an IRA?

I will probably push for the Rollover IRA (instead of the Traditional) since they know how to workaround it now. And I will probably settle for the new Roth IRA. But I wanted to check here first to see if anybody has some comments about this.

Thank you
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

chaser wrote: Tue Apr 23, 2024 4:20 pm (For contrast, I do know that T. Rowe Price does have an explicit Roth Rollover IRA.)
Never heard of such a thing.
searchingforanswers
Posts: 1
Joined: Mon Apr 29, 2024 5:20 pm

Re: How can I close my Solo 401(k)?

Post by searchingforanswers »

I was considering closing my vanguard 401k account also and rolling it over to my traditional IRA. When reviewing the IRS 401k plan "termination" steps - I read that one of the steps is " You must also amend your plan for any law changes your plan was required to implement as of your plan termination date". I think this includes pre-approved plans like the vanguard individual 401k plan. That made me wonder if Vanguard updates the basic plan document for any applicable laws which may become active since the last restatement period? I did contact the small business area at vanguard and received very succinct answers stating that the plan document included all applicable IRS updates since restatement if it was necessary and i was told that there were no amendments to the basic plan document since the last restatement but the rep did not elaborate oradd any additional information. Can anyone answer if they know that Vanguard's basic plan document is up to date. it could be an obvious answer to some but I want to feel pretty certain that i am not supposed to amend the plan for updates in order to terminate it. I really want to make sure i'm in compliance with all the rules in case of an audit. in another IRS area I did read that "most pre-approved plan document providers will amend the plan to comply with law changes required between restatements". i'm pretty much looking for clarity on whether vanguard does this. I should mention that i have always been the only participant in the plan, all my other filings (5500-ez and restatement records are up to date and work has been winding down over the years so i haven't had any contributions/distributions in the solo 401k for a few years so to me it makes sense to close it if i can..... any advice appreciated.
Leesbro63
Posts: 10877
Joined: Mon Nov 08, 2010 3:36 pm

Re: How can I close my Solo 401(k)?

Post by Leesbro63 »

HomeStretch wrote: Fri Apr 19, 2024 5:26 am See my comments in blue font, below.
chaser wrote: Fri Apr 19, 2024 1:42 am Procedure:
  1. Amend my plan with a letter indicating that my plan is being terminated on a certain date. I keep this in my records.
  2. Notify myself (the participant) in writing that the plan is being terminated. (I guess I keep this in my records too.)
  3. Call up Vanguard on the phone and tell them the following:
    1. I wish to terminate my Solo 401K plan
    2. I want to rollover the assets in my plan (in kind) to:
      1. a Vanguard Rollover IRA for my Employer (tax deferred) contributions
      2. a Vanguard Rollover Roth IRA for my Employee (post tax) contributions

        * NOTE: I read some other threads that strongly recommend rolling over into separate accounts and avoid commingling with other pre-existing IRAs. I don’t fully understand the reasons for this, but it sounds like there are good reasons and once commingled, you can’t un-commingle. So better safe than sorry?
      i401k plans are not covered by ERISA. Two reasons to rollover the i401k balance to a separate Rollover IRA may be:(1) if your state offers additional IRA protections for 401k rollover balances, and (2) in the event of a future reverse rollover of the IRA into a 401k plan with restrictions on the source of the reverse rollover funds.

      Note: Using a separate IRA does not exclude the 12/31 IRA balance from being included on Form 8606 in the calculation of pro-rated taxes on a backdoor Roth, if any.
    3. Make sure Vanguard will file the needed 1099-R(s) (is it just one, or multiple?) on my behalf so I don’t have to file them myself.

      Yes, Vanguard (like many of the mainstream i401k providers) will file Form 1099-R for the distribution of the plan assets.
    4. Validate with Vanguard everything sounds correct, and nothing here should trigger any taxable events.

      Vanguard will not provide tax advice. If they do, don’t rely on it (check with your tax professional).
  4. After Vanguard completes the transfer of assets and termination (Vanguard told me it might take about 2 days),
    Vanguard may need to do a 2nd sweep to transfer out any dividends or interest paid after the 1st sweep. This is usually done automatically. Check your i401k balances after month end to be sure the balance is zero.

    file the final Form-5500EZ:
    1. I will be using EFAST to file it. (I just filed my annual Form 5500-EZ for 2023 last week, so I know my account access works.)
    2. I have up-to 7 months to file this final form, but I will file this as soon as I can. Regardless, the 2024 Form will not be ready within my time window, so it is okay to use the 2023 Form 5500-EZ.

      The filing deadline is the 7 month after the end of the month in which the plan assets were fully distributed. If your plan year end is 4/26/24, the final Form 5500-EZ due date is 11/30/24.
    3. My Form 5500-EZ will have the following differences compared to my prior filings:
      1. For “For the calendar plan year 2023 or fiscal plan year beginning (MM/DD/YYYY)”, I will put 01/01/2024
      2. And for ending, I will put the date where Vanguard has finished moving my assets and I have $0 left in the plan, e.g. 04/26/2024
      3. In Part 1A: Make sure to check “(3) the final return filed for the plan”
      4. Also in Part1A: Do I also need to check “(4) a short plan year return (less than 12 months)”? (Seems like I should check it.) yes, if the plan year end is anything other than 12/31, check the short plan year box.
      5. Part2 5b(1): “Total number of participants at the end of the plan year” becomes 0.
      6. Part2 5b(2) “Total number of active participants at the end of the plan year” becomes 0.
      7. Part3 6a: "Total End of the Year Plan Assets" will now be 0.
      8. Part3 6c: "Net Plan Assets" will now consequently be 0.
  5. The End
Thank you. I really appreciate everybody's feedback in this forum.
If you have a i401k plan loan, that needs to be taken into account.

Keep a copy of the EFAST2 filing and filing confirmation in your files.

IRS Instructions to Form 8606 and the DOL EFAST2 filing guidelines may be helpful to review prior to filing.
I'm not familiar with EFAST2. It's a small 401K that I've closed so this will be my first and last Form 5500. Can I just mail it by certified mail?
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

searchingforanswers wrote: Mon Apr 29, 2024 5:55 pm I was considering closing my vanguard 401k account also and rolling it over to my traditional IRA. When reviewing the IRS 401k plan "termination" steps - I read that one of the steps is " You must also amend your plan for any law changes your plan was required to implement as of your plan termination date". I think this includes pre-approved plans like the vanguard individual 401k plan. That made me wonder if Vanguard updates the basic plan document for any applicable laws which may become active since the last restatement period? I did contact the small business area at vanguard and received very succinct answers stating that the plan document included all applicable IRS updates since restatement if it was necessary and i was told that there were no amendments to the basic plan document since the last restatement but the rep did not elaborate oradd any additional information. Can anyone answer if they know that Vanguard's basic plan document is up to date. it could be an obvious answer to some but I want to feel pretty certain that i am not supposed to amend the plan for updates in order to terminate it. I really want to make sure i'm in compliance with all the rules in case of an audit. in another IRS area I did read that "most pre-approved plan document providers will amend the plan to comply with law changes required between restatements". i'm pretty much looking for clarity on whether vanguard does this. I should mention that i have always been the only participant in the plan, all my other filings (5500-ez and restatement records are up to date and work has been winding down over the years so i haven't had any contributions/distributions in the solo 401k for a few years so to me it makes sense to close it if i can..... any advice appreciated.
Vanguard sends you the required restatement documents and requires you to return them signed. They would have nagged you and flagged your account if they were not done.
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

Leesbro63 wrote: Sat May 11, 2024 8:43 am I'm not familiar with EFAST2. It's a small 401K that I've closed so this will be my first and last Form 5500. Can I just mail it by certified mail?
Sure, filing on paper is still allowed.
Last edited by HomeStretch on Sat May 11, 2024 10:59 am, edited 1 time in total.
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

HomeStretch wrote: Sat May 11, 2024 10:19 am Sure, filing on paper is still allowed.
Unless he is filing >250 returns of any type!
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MP123
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Re: How can I close my Solo 401(k)?

Post by MP123 »

Leesbro63 wrote: Sat May 11, 2024 8:43 am I'm not familiar with EFAST2. It's a small 401K that I've closed so this will be my first and last Form 5500. Can I just mail it by certified mail?
Although you likely meet the requirements to still be allowed to paper file it's probably a best practice to file online at www.efast.dol.gov.

This will give you an almost immediate confirmation that the 5500 has been received and accepted, as well as some basic validation of your entries. But you may need to navigate the Login.gov signup if you don't already have an account.

I've heard some (perhaps apocryphal) stories of paper 5500s being kicked back months after the deadline for missing signatures, dates, and so on, resulting in exposure to the crazy penalties that apply to late returns. Especially since this is your last return it would be nice to have it all wrapped up and not have to worry about it. But, yes, you can paper file if you really want to.
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CalPoppy
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Re: How can I close my Solo 401(k)?

Post by CalPoppy »

MP123 wrote: Sat May 11, 2024 10:29 am Although you likely meet the requirements to still be allowed to paper file it's probably a best practice to file online at www.efast.dol.gov.
I agree with this. Also, although it’s not the best online form experience, it’s not bad. It follows the exact format of the paper form. If you have a previous completed 5500, it’s helpful to have that handy.
Leesbro63
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Re: How can I close my Solo 401(k)?

Post by Leesbro63 »

If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
User avatar
MP123
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Re: How can I close my Solo 401(k)?

Post by MP123 »

Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
HomeStretch
Posts: 11774
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Re: How can I close my Solo 401(k)?

Post by HomeStretch »

Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
I am not sure what you mean exactly by “something goes wrong”.

But let’s hypothetically say you mean the IRS doesn’t believe (even with the certified mail receipt) that Form 5500-EZ was mailed by the filing deadline. There is a large penalty per day up to a max for late filings. There is a penalty relief program with a $500 fee.

EFAST2 gives immediate confirmation of filing and does some edit checks on the data validity before filing.
Leesbro63
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Re: How can I close my Solo 401(k)?

Post by Leesbro63 »

MP123 wrote: Sat May 11, 2024 11:29 am
Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
Hmm. Perhaps it’s worth it to jump through the Efile hoops after all. One other question: is this the first Form 5500 or the final? In reality it’s both. I assume “final”.
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: How can I close my Solo 401(k)?

Post by toddthebod »

Leesbro63 wrote: Sat May 11, 2024 11:50 am
MP123 wrote: Sat May 11, 2024 11:29 am
Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
Hmm. Perhaps it’s worth it to jump through the Efile hoops after all. One other question: is this the first Form 5500 or the final? In reality it’s both. I assume “final”.
It's both.
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MP123
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Re: How can I close my Solo 401(k)?

Post by MP123 »

Leesbro63 wrote: Sat May 11, 2024 11:50 am
MP123 wrote: Sat May 11, 2024 11:29 am
Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
Hmm. Perhaps it’s worth it to jump through the Efile hoops after all. One other question: is this the first Form 5500 or the final? In reality it’s both. I assume “final”.
It's first, final, and also very likely "short plan year". They aren't exclusive.
Leesbro63
Posts: 10877
Joined: Mon Nov 08, 2010 3:36 pm

Re: How can I close my Solo 401(k)?

Post by Leesbro63 »

MP123 wrote: Sat May 11, 2024 11:54 am
Leesbro63 wrote: Sat May 11, 2024 11:50 am
MP123 wrote: Sat May 11, 2024 11:29 am
Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
Hmm. Perhaps it’s worth it to jump through the Efile hoops after all. One other question: is this the first Form 5500 or the final? In reality it’s both. I assume “final”.
It's first, final, and also very likely "short plan year". They aren't exclusive.
Thank you very much.
HomeStretch
Posts: 11774
Joined: Thu Dec 27, 2018 2:06 pm

Re: How can I close my Solo 401(k)?

Post by HomeStretch »

Leesbro63 wrote: Sat May 11, 2024 12:07 pm
MP123 wrote: Sat May 11, 2024 11:54 am
Leesbro63 wrote: Sat May 11, 2024 11:50 am
MP123 wrote: Sat May 11, 2024 11:29 am
Leesbro63 wrote: Sat May 11, 2024 11:16 am If I mail it in, by certified mail, and something goes wrong anyway, what’s the worst case penalty situation?
$250/day. But the "good" news is that it's capped at $150k.
Hmm. Perhaps it’s worth it to jump through the Efile hoops after all. One other question: is this the first Form 5500 or the final? In reality it’s both. I assume “final”.
It's first, final, and also very likely "short plan year". They aren't exclusive.
Thank you very much.
If you terminate the plan in 2024 and file before 1/1/25, EFAST2 will have the 2023 Form 5500-EZ. Go ahead and use that form with the 2024 plan start/end dates.

Which plan boxes to check has been covered, above.

The net plan assets and active/total participants as of the end of the plan year should be zero.

There are two new 2023 Form questions about the plan’s IRS determination letter date and sequence # IIRC. If you search forum threads, that info has been posted for some plan providers.

I think these are the most common questions that get posted by first filers/final Form 5500-EZ.
Leesbro63
Posts: 10877
Joined: Mon Nov 08, 2010 3:36 pm

Re: How can I close my Solo 401(k)?

Post by Leesbro63 »

I just filed Form 5500EZ online and believe it was accepted. Special thank you to MP123, HomeStretch, Chaser, toddthebod, searchingfornaswers, and anyone else here directly answering "how to" questions who I may have missed.
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