Author Topic: Anyone Execute a mega backdoor roth in solo 401k ?  (Read 20767 times)

DavidAnnArbor

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Re: Anyone Execute a mega backdoor roth in solo 401k ?
« Reply #150 on: June 12, 2019, 01:52:06 PM »
Got a reminder email from Justin at DiscountSolo401k that if the 401k assets were worth $250,000 (or more) on Dec. 31st of 2018 then you need to file Form 5500-EZ by July 31st.

Here's the email:

"We're writing to inform you of a 401k compliance deadline on July 31st, 2019. IRS Form 5500-EZ is due by the end of next month for all Solo 401k plans that had $250,000 or more in plan assets on December 31st, 2018. If your plan had less than $250,000 in assets or if you just created your new plan in 2019, you do not need to file form 5500-EZ this year.

Again, Form 5500-EZ is due if your plan was valued at or above $250,000 in 2018. This form is also due if 2018 was your last plan year before terminating.

Form 5500-EZ is a very simple informational return and there are no taxes due in connection with the form. If you need to file this form and would like more information about the filing, please  see the attached guide. Here is a link to the form on the IRS website:  https://www.irs.gov/pub/irs-pdf/f5500ez.pdf

DavidAnnArbor

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Re: Anyone Execute a mega backdoor roth in solo 401k ?
« Reply #151 on: September 16, 2019, 07:54:38 PM »
Employee Deferral Election

Well I need to make a correction about when one has to make the election for salary deferrals to the Solo 401k plan.  I thought the election had to be done by Dec. 31st of the year prior to the tax year for which one was making these contributions.  But instead it really is Dec. 31st of the actual year for which you are contributing.

There's a thread in Bogleheads.org that goes into this in more detail

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=285717&sid=c0e93a28b597182cd947bc62cd1565bc

"Spirit Rider wrote: ↑
Fri Sep 06, 2019 5:09 pm
An employee deferral election is just that. You must complete an election specifying how and at what rate by 12/31. This is not reported to the IRS, only retained in your records. For the self-employed the actual contribution may occur anytime from 1/1 of the current year -> the tax filing deadline including extensions. However the deferral contributions must match the election.

knightrider wrote:
Thanks. So if I understand correctly an "election" is just some kind of notice of intent done before 12/31. Then the actual contribution can occur until tax deadline?

Spirit Rider wrote
It is more that an intent. It is an actual commitment that you can change up until 12/31, then it becomes binding. It must be deterministic based on your compensation and 401k employee elective contribution rules. For example, a percentage of your compensation, a fixed periodic amount, etc... It can not exceed 100% of your compensation or your remaining employee elective contribution limit.

knightrider wrote:
I don't anticipate doing this separately. Will probably do my "election" and contribution the same time. And I assume this "election" is something you do online in Fidelity?

Spirit Rider wrote:
You generally should do an election as soon as your know what it will be so you don't forget. You can always change it later, but no later than 12/31. There is no way to do this online at Fidelity. This has nothing to do with them. You complete it and retain it in your records.

There is no IRS form for this Fidelity has a sample Fidelity Retirement Planó401(k) Salary Reduction Agreement ( https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/401k-salary-reduction-agreement.pdf ) that they use for all their 401k plans. It is not ideal for self-employed individuals, because it assumes you are a W-2 employee with pay periods. However, you can edit it to suit your purposes. For example, you could change "amount per pay period" to "amount per quarter" or select "a one-time deferral contribution of.""