Checking a few details of late-filing of 5500-EZ (Solo 401(k))

[mjs9876543210]

Hi -

I neglected to file 5500-EZ for 2022 and 2023.

I'm in the process of filing out the delinquent 5500-EZs and the corresponding Form 14704 following the IRS's Penalty Relief Program.

I think I have everything right but I am hoping the helpful people here can confirm a couple of details. This is a Schwab-based Solo 401(k). I'm the sole employee.

Plan Dates. My plan was created on 01/27/2022 so was not active for a full 12 months. Should I enter 01/01/2022 - 12/31/2022 as the dates and check the box in Part I A(4) - "a short plan year)? Or is "a short plan year" only for the last year of the plan?

Question 5 - Number of participants at the beginning of the plan year. For the first year of the plan, I think the correct answer is 1 - me. But could the correct answer by 0 on the day the plan was first created?

Question 8 (Plan Characteristics). The list of all codes is on page 7 of the 5500-EZ instructions. This appears to be a bit of a black art, but AFAICT the right codes for me are

• 2E - Profit-sharing plan
• 2J - Section 401(k) feature...
• 3B - Plan covering self-employed individuals.
• 3D - Pre-approved pension plan – A pre-approved pension plan under sections 401, 403(a), 403(b), and 4975(e)(7) of the Code that is subject to a favorable opinion letter from the IRS.

Question 12 (Opinion Letter). Schwab's current plan documents https://www.schwab.com/resource/401k-ba ... n-document Page 35 have a Letter Serial No of Q704149a and a date of 8/31/2020. (My plan was formed 01/27/2022.) The IRS site has a list of Opinion Letters https://www.irs.gov/pub/irs-tege/ppa-listdb3.pdf and in that list Schwab is shown as having Letter Serial No Q705055 and a date of 08/28/2023. Since my plan was formed before the most recent of those two dates I'm planning to use the older date. But I'd appreciate hearing if anyone thinks this is wrong.

Form 14704 Question 8: last day of plan for each delinquent return.... Since I have two delinquent returns I think I should enter the last date for each of the two years - so 12/31/2022 and 12/31/2023. Does that sound right?

Thank you

[supalong52]

Maybe u/spiritrider could chime in.

I think it's a short plan year that starts 1/27/2022.

1 participant as soon as it is created.

Those codes look right to me.

I would probably do the opinion letter in effect at the time you should have filed the 5500. That's the 8/31/2020 date. Next year, I would use the updated letter.

Not 100% sure, but just my thoughts as a fellow Schwab i401k owner.

[LadyGeek]

This thread is now in the Personal Finance (Not Investing) forum (tax filing).

(Thanks to the member who reported the post and explained what's wrong.)

[HomeStretch]

For the annual 2022 Form 5500-EZ:
1. The plan year is 1/27/22 - 12/31/22.
2. Part I.A. - check box (1) “first return” and box (4) “short plan year”.

For Q5 - # participants - 1 at beginning and end of year for annual Form 5500-EZ.

[SuzBanyan]

Not an expert on this, but when you form a new Solo 401k, it is generally advised that you begin the initial plan year as of the first day of the calendar year in which you signed the paperwork. I believe this allows you to use all of the income from that year to calculate allowable contributions and deferrals. There may be some exceptions, such as when you are waiting 12 months to open a new plan after terminating an old one.

OP: Are you sure that your 2022 plan year didn’t start on January 1 per the Application you submitted to Schwab?

[MP123]

The 5500 Form is asking for the effective date of the plan, not the adoption date.

As mentioned above, they might be the same, but often the effective date is the first of the year. Check your adoption agreement where you entered both.

Interesting question about the opinion letter. This question has only appeared on the form in the last year or two. I haven't seen guidance about what letter number to enter when submitting a return under the PRP. Your plan to use the letter in effect at the time of the delinquent return sounds reasonable.

[mjs9876543210]

Thank you for your help, all.

FYI, the "Effective Date" in the Adoption Agreement is 01/27/2022. Deferrals can be made after that date (or after the Agreement is signed, whichever comes later). I think I could have made the Effective Date January 1 but did not.

[toddthebod]

Hi -

I neglected to file 5500-EZ for 2022 and 2023.

I'm in the process of filing out the delinquent 5500-EZs and the corresponding Form 14704 following the IRS's Penalty Relief Program.

I think I have everything right but I am hoping the helpful people here can confirm a couple of details. This is a Schwab-based Solo 401(k). I'm the sole employee.

Plan Dates. My plan was created on 01/27/2022 so was not active for a full 12 months. Should I enter 01/01/2022 - 12/31/2022 as the dates and check the box in Part I A(4) - "a short plan year)? Or is "a short plan year" only for the last year of the plan?

Question 5 - Number of participants at the beginning of the plan year. For the first year of the plan, I think the correct answer is 1 - me. But could the correct answer by 0 on the day the plan was first created?

Question 8 (Plan Characteristics). The list of all codes is on page 7 of the 5500-EZ instructions. This appears to be a bit of a black art, but AFAICT the right codes for me are

• 2E - Profit-sharing plan
• 2J - Section 401(k) feature...
• 3B - Plan covering self-employed individuals.
• 3D - Pre-approved pension plan – A pre-approved pension plan under sections 401, 403(a), 403(b), and 4975(e)(7) of the Code that is subject to a favorable opinion letter from the IRS.

Question 12 (Opinion Letter). Schwab's current plan documents https://www.schwab.com/resource/401k-ba ... n-document Page 35 have a Letter Serial No of Q704149a and a date of 8/31/2020. (My plan was formed 01/27/2022.) The IRS site has a list of Opinion Letters https://www.irs.gov/pub/irs-tege/ppa-listdb3.pdf and in that list Schwab is shown as having Letter Serial No Q705055 and a date of 08/28/2023. Since my plan was formed before the most recent of those two dates I'm planning to use the older date. But I'd appreciate hearing if anyone thinks this is wrong.

Form 14704 Question 8: last day of plan for each delinquent return.... Since I have two delinquent returns I think I should enter the last date for each of the two years - so 12/31/2022 and 12/31/2023. Does that sound right?

Thank you

Did you rollover funds into this plan in 2022 or 2023?

The opinion letter should be the letter attached to your adoption agreement. Schwab sends you a new one when they restate the plan. That's when you would use the new letter.

Form 14704 question 8: correct, you write "12/31/22, 12/31/23".

[rady2retire]

Just clarifying for myself. I was under the impression this form did not need to be filed if assets in the plan were less than $250k. Is this true?

[realclemsongrad]

Just clarifying for myself. I was under the impression this form did not need to be filed if assets in the plan were less than $250k. Is this true?

This is correct.

[toddthebod]

Just clarifying for myself. I was under the impression this form did not need to be filed if assets in the plan were less than $250k. Is this true?

Yes, that's why I asked if they did a rollover.

[mjs9876543210]

@toddthebod Yes, I did a rollover.

@realclemsongrad and @rady2retire My understanding is that 5500-EZ is required each year the December 31 asset value is greater than $250K AND the last year of the plan (regardless of balance). IANAL.

[realclemsongrad]

@toddthebod Yes, I did a rollover.

@realclemsongrad and @rady2retire My understanding is that 5500-EZ is required each year the December 31 asset value is greater than $250K AND the last year of the plan (regardless of balance). IANAL.

Thank you for correcting me. You are correct on both criteria.

[alexbogle]

8. I also included 2R: Participant-directed brokerage accounts provided as an
investment option under the plan. My complete list was 2E 2J 2R 3B 3D. I think either way is fine and could see the argument to exclude 2R.

12. My plan was created in 2023. I used the same letter details: Q704149a and a date of 8/31/2020.