A Solo 401(k) plan does not have any end-of-year filing or reporting requirements.
There are, however, a few things you want to be aware of as you mark the end of the tax year for your plan.
Deadline for Employee Deferrals in a W-2 Environment
If your business that sponsors your 401k is a corporation or a LLC taxed as a corporation, and you pay yourself W-2 wages, then the last opportunity you have to make employee deferral contributions is the payroll period ending December 31st. The actual contribution may take place in early January, but must happen with “your last paycheck for the year”. Employer profit sharing contributions do not need to be made until you file your business tax return.
In a pass-through environment such as a sole-proprietorship or LLC, you do not really have “payroll” per-se, so you can wait until you file your taxes for the business to make a final determination on what amounts you intend to contribute on an employee deferral and/or company profit sharing basis.
End of Year Valuation
Plan reporting deadlines for the Solo 401(k) don’t roll around until July, but one of the things you will need to report is the end-of-year fair market value of your plan.
To value your plan, simply sum up all assets held by the plan. If you have more than one participant account (owner/spouse, traditional/Roth), you will need to value the total plan as well as each sub-account. Common assets and how to value them are listed below:
|Bank or Brokerage Account||Statement value|
|Real Property||Realtor Comps|
|Mortgage/loan/note||The open balance on the note|
|Tax Liens||Redemption value|
Note that plan participants subject to Minimum Distribution Requirements will need to provide a more robust valuation, and may be required to have difficult to value properties such as real estate appraised.
In-Plan Roth Conversions
If you wish to convert some of the eligible portion of tax-deferred value within your plan to Roth status, the conversion event must take place prior to December 31st.
If your plan paid a vendor that is not a corporation more than $600 during the year, you will need to issue a 1099-MISC to those vendors to report that income. The deadline to deliver forms to recipients is January 31st or the first business day thereafter if the 31st falls on a weekend.
This is a good time to identify those parties you may need to generate a 1099-MISC for and ensure that you have a current W-9 form from them.
Required Minimum Distributions
If you are required to take distributions from your 401(k) account, those distributions must be taken by December 31st or penalties will apply. Required Minimum Distributions are required for plan participants over age 72, even in a Roth account associated with a 401(k) plan. For those born before June 1, 1949, the starting age for RMDs is 70 1/2. Work with your tax advisor if you have questions on this topic or need help calculating your distribution amount.
This page has been updated to reflect law changes implemented with the SECURE Act of 2019.