Don’t let paperwork derail your retirement savings!

  • Solo 401(k) account owners must file Form 5500-EZ if assets exceed $250,000.
  • Filing Form 5500-EZ can be complicated and is often overlooked by solopreneurs.
  • Common issues include understanding due dates, needing an EIN, and knowing which form to file.
  • Penalties for late or incorrect filing can be significant, reaching up to $150,000 per plan year.
  • Consulting a tax adviser is recommended to avoid mistakes in the filing process.

Many financial experts recommend gig workers to establish and fund a solo 401(k), but they often overlook the complexities involved in filing Form 5500-EZ. This form is mandatory for those with solo 401(k) assets exceeding $250,000, and the filing process can be daunting, especially for first-timers. The 2023 Instructions for Form 5500-EZ can be confusing, leading to potential pitfalls for solo 401(k) account owners. nnCommon issues arise around the due date for filing, which is typically July 31 for calendar-year plans. Many owners may forget this deadline, especially if they have already filed their taxes earlier in the year. Extensions are possible, but they require additional steps that can easily be missed. nnAnother common mistake is not obtaining an Employer Identification Number (EIN), which is necessary for filing. Many gig workers use their Social Security numbers, but this can lead to delays and penalties if not addressed in time. nnChoosing the correct form is also crucial. While most will file Form 5500-EZ, those with plans covering minor children must file Form 5500-SF instead, which has its own set of requirements. nnLastly, remember that if your plan has $250,000 or more in assets at the end of the year, you must file, even if it’s the final year of the plan. If you have multiple retirement plans, combine their assets to determine if you meet the filing threshold. nnGiven the complexities and potential penalties, seeking advice from a tax professional is highly advisable for solo 401(k) account owners. Understanding these common pitfalls can help ensure a smoother filing process and protect your retirement savings.·

Factuality Level: 6
Factuality Justification: The article provides useful information about the Form 5500-EZ and the challenges faced by solo 401(k) account owners. However, it includes personal anecdotes and opinions that may detract from its objectivity. While the information is generally accurate, the reliance on personal experience and subjective commentary introduces some bias, and the article could benefit from a more structured presentation of facts without excessive detail.·
Noise Level: 7
Noise Justification: The article provides detailed information about the Form 5500-EZ filing process for solo 401(k) account owners, highlighting common pitfalls and penalties. It includes expert opinions and practical advice, which adds value. However, it could benefit from a more structured analysis of the broader implications of these requirements on gig workers and their financial planning.·
Public Companies: Charles Schwab & Co. (SCHW)
Key People: Jason Roberts (Chief Executive of Pension Resource Institute), Christine Russell (Senior Product Manager of Small-Business Retirement Plans at Charles Schwab & Co.)

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Financial Relevance: Yes
Financial Markets Impacted: The article discusses the implications of filing Form 5500-EZ for solo 401(k) account owners, which can affect retirement savings and tax obligations for gig workers and small business owners.
Financial Rating Justification: The article provides detailed information on the requirements and potential penalties associated with the Form 5500-EZ, which is relevant to financial planning and retirement savings, thus impacting financial markets related to retirement accounts.·
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: The article discusses the complexities and challenges of filing Form 5500-EZ for solo 401(k) account owners, but it does not mention any extreme events that occurred in the last 48 hours.·
Move Size: No market move size mentioned.
Sector: All
Direction: Down
Magnitude: Medium
Affected Instruments: Stocks

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