Author Topic: Individual 401k and Tax forms  (Read 2110 times)

Grande

  • Stubble
  • **
  • Posts: 112
Individual 401k and Tax forms
« on: February 13, 2015, 03:04:25 PM »
This is my first year with a individual 401k as my wife is self-employed. Quick question- Is there a tax form that needs to be submitted when filing? From what I can find one needs to only file Form 5500-SF when assets at year end at $250,000 or more. I sent an email to the company I use about this and this seems to be the case. It just seems the IRS would want some filing by the investment company to cross what the tax filer puts on his 1040.   

Any first hand experience?

dandarc

  • Magnum Stache
  • ******
  • Posts: 4578
  • Age: 38
Re: Individual 401k and Tax forms
« Reply #1 on: February 13, 2015, 03:07:53 PM »
Didn't think to ask the question, but it hasn't been a problem the last 2 years for us.  Granted the IRS can take a very long time to let you know of an issue, but so far, no problem for us.

Grande

  • Stubble
  • **
  • Posts: 112
Re: Individual 401k and Tax forms
« Reply #2 on: February 13, 2015, 03:44:00 PM »
Didn't think to ask the question, but it hasn't been a problem the last 2 years for us.  Granted the IRS can take a very long time to let you know of an issue, but so far, no problem for us.

Really? So we are using the honor system on this? You just fill in the contribution amount? I can't believe they don't have this covered.

Seems like the only rule is you cannot exceed 100% of earned income/$17500.  That of course would be  clear to them on the 1040.
« Last Edit: February 13, 2015, 03:46:42 PM by Grande »

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 2264
  • Age: 55
  • Location: Ann Arbor, Michigan
Re: Individual 401k and Tax forms
« Reply #3 on: February 13, 2015, 09:09:08 PM »
The company you use for your individual 401(k) has created a document that complies with IRS rules that facilitates it to be able to offer customers like you the option to utilize it. It's possible these plan documents require them to notify the IRS of any contributions made. In any case there's a line on your 1040 form that you use to indicate the amount you have put in your individual 401(k) for the purpose of lowering your AGI and thereby not paying tax on the amount invested in the individual 401(k)

dandarc

  • Magnum Stache
  • ******
  • Posts: 4578
  • Age: 38
Re: Individual 401k and Tax forms
« Reply #4 on: February 15, 2015, 09:10:06 AM »
Didn't think to ask the question, but it hasn't been a problem the last 2 years for us.  Granted the IRS can take a very long time to let you know of an issue, but so far, no problem for us.

Really? So we are using the honor system on this? You just fill in the contribution amount? I can't believe they don't have this covered.

Seems like the only rule is you cannot exceed 100% of earned income/$17500.  That of course would be  clear to them on the 1040.
Not really any different than any other business expense - if you buy $X worth of stables for your business, you're the only one who knows that's a business expense for you - Office Depot isn't going to report that on your behalf.  Important to keep records in case of audits so you can prove these were legit expenses, but it really is an honor system for the most part.