Failure to file Form 5500 – How to fix the mistake and request penalty relief.
Updated: Apr 23, 2021
If your Self-Directed Solo 401(k) plan has a cumulative balance of $250,000 or more by the end of the year, you will need to file Form 5500-EZ or Form 5500-SF. (Refer to these blog posts for more information about calculating the amount and which Form you need to file.) What happens, though, if your plan has been over the minimum amount for a while and the Form should have been filed for previous years, but wasn’t? I have provided exact verbiage from the IRS’s website, below, that explains how to find, fix, and correct the mistake. At the bottom of this article, you will also find a link to information about their penalty relief program as well as a link to the Department of Labor’s (DOL) delinquent filer program, which includes calculators and online payment information. When reading this information, remember that Self-Directed Solo 401(k) plans are “non-ERISA” plans because they only include the business owner and his/her spouse or business partner(s), if/when applicable.
Here is a post from the IRS's website:
401(k) Plan Fix-It Guide - You haven't filed a Form 5500 this year
"ERISA and the Internal Revenue Code require many employers and plan administrators to submit reports to government agencies and furnish certain plan information to participants. Most 401(k) plan sponsors are required to file an annual Form 5500, Annual Return/Report of Employee Benefit Plan. For an explanation of how to file your Form 5500 return, in addition to the EFAST electronic filing requirements, visit www.efast.dol.gov.
Very small employers whose employees are limited to owners or partners and their spouses must file Form 5500-EZ with the IRS for any year in which plan assets exceed $250,000 ($100,000 for years prior to 2007).
All plan sponsors, regardless of plan asset value, must file a final return for the year their plan is terminated and all assets distributed.
How to find the mistake: