Do you have a solo 401(k) or similar retirement plan?

If yes, the law requires you to file at least one IRS Form 5500-EZ.

Failing to file that simple two-page form can trigger penalties of up to $150,000.

Fortunately, it is relatively easy to avoid this penalty.

What Is Form 5500-EZ?

You will need to file at least one IRS Form 5500-EZ if you have a one-participant retirement plan—that is, a qualified plan that covers only a business owner (and spouse), whether or not the business is incorporated, or covers partners (and their spouses) of a business partnership.1

Examples of plans that may need to file Form 5500-EZ include:

Solo 401(k) plans—i.e., individual 401(k), one-participant 401(k), or self-employed 401(k) plans

Money purchase pension plans

Profit-sharing plans

Defined benefit pension plans

Cash balance plans (a type of defined benefit plan)

Target benefit plans

Certain retirement arrangements are exempt from Form 5500-EZ filing requirements, including:

SIMPLE IRAs

Most SEP IRAs

Traditional and Roth IRAs

403(b) plans for single participants

Form 5500-EZ is an information return intended to provide the IRS and the Department of Labor with some basic data about the plan’s operation and compliance with government regulations.

You—the business owner—are the plan administrator or plan sponsor and the one responsible for filing Form 5500-EZ. You can use a third-party administrator to manage your plan, complete ... Log in to view full article.